TCS - CASTROLIND Pair Analysis

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End-of-day divergence (Standardized residual) is 1.57.
Half life of pair is 9.85.
Real time (live) divergence is calculating using following formula:
[castrolind_price - (0.0633 * tcs_price) - 0.127]/11

(where 0.127 is mean error and 11 is standard error)
Technical strength of TCS is 4.4. (Support & Resistance)
Technical strength of CASTROLIND is 7.7. (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-castrolind.
Analyse any other pair:

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

Charts

TCS Futures - NSE
Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
February 27, 2020 2157.75 10045250.0 14646.0 14646.0 2156.15
March 26, 2020 2147.35 1901250.0 7701.0 7701.0 2156.15
April 30, 2020 2155.8 27250.0 49.0 49.0 2156.15
Lot size: 250.
Futures are not traded in CASTROLIND.
Click here for backtesting results.

TCS-CASTROLIND Analysis with different time frames and thresholds

Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 53590.2384864
Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 50539.5225975
Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 47947.6431361
Time Frame 1month, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 47891.0821537
Time Frame 3months, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 40462.2057234

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