DHFL - IRB Pair Analysis

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End-of-day divergence (Standardized residual) is -0.0798.
Half life of pair is 3.23.
Real time (live) divergence is calculating using following formula:
[irb_price - (0.457 * dhfl_price) - 0.0753]/14.7

(where 0.0753 is mean error and 14.7 is standard error)
Technical strength of DHFL is 7.5. (Support & Resistance)
Technical strength of IRB is 7.3. (Support & Resistance)
Recommendation
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Entry Criterion: Take positions when divergence becomes (+/-)1.5. And exit positions when divergence becomes (+/-)0.0.
Stop Loss: Put your stop loss when divergence becomes more than 2.5 or less than -2.5. We suggest you always use stop losses.
Note: When you trade in futures, keep in mind the expiry date of futures as divergence might not end before expiry date.
Click here to see all recommendations for pair dhfl-irb.
Analyse any other pair:

How to choose pairs?
Choose stocks from same sector/subsector.
Use stock with large market capitalization as first stock.
Here is a list of pairs chosen analytically.

Charts

DHFL Futures - NSE
Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
April 26, 2018 579.25 11899500.0 4346.0 11516.0 581.35
May 31, 2018 584.4 16711500.0 1525.0 8396.0 581.35
June 28, 2018 590.2 10500.0 1.0 1.0 581.35
Lot size: 1500.0.

IRB Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
April 26, 2018 265.15 14212500.0 4520.0 5677.0 264.45
May 31, 2018 266.55 4002500.0 1321.0 2129.0 264.45
Lot size: 2500.0.
Click here for backtesting results.

DHFL-IRB Analysis with different time frames and thresholds

Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 66023.2824258
Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 49437.3943667
Time Frame 1month, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 18999.6272175