NTPC - CIPLA Pair Analysis

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End-of-day divergence (Standardized residual) is -1.41.
Half life of pair is 2.32.
Real time (live) divergence is calculating using following formula:
[cipla_price - (3.99 * ntpc_price) - 0.108]/9.96

(where 0.108 is mean error and 9.96 is standard error)
Technical strength of NTPC is 1.7. (Support & Resistance)
Technical strength of CIPLA is 1.3. (Support & Resistance)
Recommendation
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Entry Criterion: Take positions when divergence becomes (+/-)2.0. 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 ntpc-cipla.
Analyse any other pair:

How to choose pairs?
Choose stocks from same sector/subsector.
Use stock with large market capitalization as first stock.

Charts

NTPC Futures - NSE
Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
February 27, 2020 109.95 84408000.0 9242.0 9242.0 110.1
March 26, 2020 106.5 33955200.0 7225.0 7225.0 110.1
April 30, 2020 107.15 734400.0 45.0 45.0 110.1
Lot size: 4800.

CIPLA Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
February 27, 2020 425.8 7537100.0 5911.0 5911.0 425.8
March 26, 2020 425.15 7349650.0 4099.0 4099.0 425.8
April 30, 2020 425.0 27600.0 8.0 8.0 425.8
Lot size: 1150.
Click here for backtesting results.

NTPC-CIPLA Analysis with different time frames and thresholds

Time Frame 3months, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 103110.331799
Time Frame 3months, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 98117.7986433
Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 71385.8484146
Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 61636.420629
Time Frame 6months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 59750.76932

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