TCS - CIPLA Pair Analysis

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End-of-day divergence (Standardized residual) is -2.98.
Half life of pair is 2.64.
Real time (live) divergence is calculating using following formula:
[cipla_price - (0.228 * tcs_price) - 0.459]/20.6

(where 0.459 is mean error and 20.6 is standard error)
Technical strength of TCS is 6.7. (Support & Resistance)
Technical strength of CIPLA is 2.9. (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 2.0 or less than -2.0. 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 tcs-cipla.
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

TCS Futures - NSE
Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
January 25, 2018 2906.45 7292000.0 7670.0 8767.0 2918.2
February 22, 2018 2917.85 461500.0 785.0 1079.0 2918.2
March 28, 2018 2935.0 2750.0 2.0 2.0 2918.2
Lot size: 250.0.

CIPLA Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
January 25, 2018 604.0 8995000.0 1653.0 1735.0 603.65
February 22, 2018 606.7 350000.0 261.0 297.0 603.65
March 28, 2018 608.0 6000.0 1.0 1.0 603.65
Lot size: 1000.0.
Click here for backtesting results.

TCS-CIPLA Analysis with different time frames and thresholds

Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 62198.5985192
Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 53706.7697167
Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 46104.6642825
Time Frame 3months, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 39164.5982402
Time Frame 3months, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 35521.0096487