RECLTD - HINDPETRO Pair Analysis

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End-of-day divergence (Standardized residual) is -0.103.
Half life of pair is 23.3.
Real time (live) divergence is calculating using following formula:
[hindpetro_price - (1.95 * recltd_price) - 2.48]/30.6

(where 2.48 is mean error and 30.6 is standard error)
Technical strength of RECLTD is 5.6. (Support & Resistance)
Technical strength of HINDPETRO is 4.6. (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.
Analyse any other pair:

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

Charts

RECLTD Futures - NSE
Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
July 30, 2020 108.95 16620000.0 1346.0 1346.0 108.45
August 27, 2020 109.3 198000.0 14.0 14.0 108.45
September 24, 2020 109.4 12000.0 0.0 0.0 108.45
Lot size: 6000.

HINDPETRO Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
July 30, 2020 211.25 23695200.0 2910.0 2910.0 211.15
August 27, 2020 211.7 259200.0 37.0 37.0 211.15
September 24, 2020 214.0 8100.0 1.0 1.0 211.15
Lot size: 2100.
Click here for backtesting results.

RECLTD-HINDPETRO Analysis with different time frames and thresholds

Time Frame 1month, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 188420.052586
Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 137066.113564
Time Frame 1year, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 107654.63219
Time Frame 1year, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 88468.7443789
Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 87381.373899

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