NTPC - VEDL Pair Analysis

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End-of-day divergence (Standardized residual) is 1.06.
Half life of pair is 2.05.
Real time (live) divergence is calculating using following formula:
[vedl_price - (0.834 * ntpc_price) - -0.115]/4.03

(where -0.115 is mean error and 4.03 is standard error)
Technical strength of NTPC is 4.5. (Support & Resistance)
Technical strength of VEDL is 5. (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 ntpc-vedl.
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
April 30, 2020 87.25 46195200.0 2246.0 2246.0 87.1
May 28, 2020 87.35 700800.0 79.0 79.0 87.1
June 25, 2020 85.95 19200.0 0.0 0.0 87.1
Lot size: 4800.

VEDL Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
April 30, 2020 77.2 86523500.0 9669.0 9669.0 76.8
May 28, 2020 77.7 1932000.0 337.0 337.0 76.8
June 25, 2020 77.45 66500.0 8.0 8.0 76.8
Lot size: 3500.
Click here for backtesting results.

NTPC-VEDL Analysis with different time frames and thresholds

Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 32410.8169395
Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 24541.25874
Time Frame 6months, Entry Threshold 2.5, Stop Loss Threshold 3, Total Profit 11745.5032211

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