>PAIR STRATEGY (KR CHOKSEY)

RECOMMEND STRATEGY

Pair Strategy : Long BHARTIARTL, Short RCOM

Long BHARTIARTL, Short RCOM on a rupee neutral basis

Currently, the May Futures of BHARTIARTL and RCOM are trading at Rs 921.15 and Rs 330.05 respectively, giving the current price ratio (BHARTIARTL / RCOM) of 2.791.

We recommend profit booking at a price ratio of 3.261.

The expected return at the target is 16.8%, computed on gross exposure.

Over the past 1 month, BHARTIARTL has underperformed RCOM as BHARTIARTL has increased by 35.3% as against an increase of 52.3% in RCOM. Hence, the current price ratio of 2.791 is trading at 3x standard deviations below 20 day mean price ratio.


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