RELIANCE - HINDUNILVR Pair Analysis

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End-of-day divergence (Standardized residual) is -1.99.
Half life of pair is 25.2.
Real time (live) divergence is calculating using following formula:
[hindunilvr_price - (1.39 * reliance_price) - 81.3]/418

(where 81.3 is mean error and 418 is standard error)
Technical strength of RELIANCE is 7.1. (Support & Resistance)
Technical strength of HINDUNILVR is 3.6. (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 3.0 or less than -3.0. 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.
Analyse any other pair:

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

Charts

RELIANCE Futures - NSE
Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
August 27, 2020 2136.7 38634520.0 77613.0 77613.0 2126.45
September 24, 2020 2141.15 568630.0 1946.0 1946.0 2126.45
October 29, 2020 2148.15 55550.0 115.0 115.0 2126.45
Lot size: 505.

HINDUNILVR Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
August 27, 2020 2199.8 14906700.0 5487.0 5487.0 2194.55
September 24, 2020 2206.0 41700.0 39.0 39.0 2194.55
October 29, 2020 2200.0 4200.0 7.0 7.0 2194.55
Lot size: 300.
Click here for backtesting results.

RELIANCE-HINDUNILVR Analysis with different time frames and thresholds

Time Frame 6months, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 62147.224878
Time Frame 6months, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 53918.1207955
Time Frame 1year, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 32671.7913964
Time Frame 1year, Entry Threshold 2.5, Stop Loss Threshold 3, Total Profit 23795.9945966
Time Frame 1year, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 23004.4291244

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