Low-Latency Statistical Arbitrage
Statistical Arbitrage involves predicting and capitalizing on small (usually statistical) mis-pricings of one or more assets. Since the predictive models are fairly well understood by participants, this is a crowded and fiercely competitive segment. Innumerable traders attempt to jump in and capture any opportunity that arises, thus making latency a crucial element in the game – Every fraction of a second matters.
Operating in such a merciless space, we analyze terabytes of data to come up with insights that help us predict these opportunities better than others. Simultaneously our top-notch in-house trading system helps us stay ahead of the curve by enabling us to be amongst the first to observe opportunities and react to them.
Market Making involves placing simultaneous buy and sell orders into the market on a regular and continuous basis. The goal is to pocket the difference between the bid-price and the ask-price several times a day. The challenge is in ensuring that no large positions are built up and in ensuring that positions are squared-off or hedged as soon as possible.
This activity increases available liquidity for other participants and reduces their slippage costs. Market Making does carry risks and High Frequency Trading infrastructure is used to quickly factor new information into the prices being quoted. This enables the Market Maker to quote with lower bid-ask spreads and generate higher trading volumes thus making the markets more efficient.
We are currently entering this field in exchanges across the world.
Research Projects: Future Potential
We encourage working on side-projects within the firm. Anyone can come up with an idea which leads to a long term, open-ended research project. Some of these may translate into business lines in the future, however the key theme behind them is “develop your own interesting ideas”.
Visit the Research Projects section to know more.