31
Oct
Introduction:Liquidity provision is a crucial aspect of financial markets that ensures smooth functioning and facilitates efficient trading. Traders and financial institutions employ various strategies to provide liquidity, including statistical arbitrage, market-making, and algorithmic approaches. In this article, we will delve into these strategies and explore their key concepts and benefits. Statistical Arbitrage:Statistical arbitrage is a strategy that seeks to profit from the price discrepancies of correlated securities. Traders identify pairs of securities that exhibit historical price relationships and take advantage of temporary price imbalances. By simultaneously buying the underperforming security and selling the overperforming one, they aim to capture the…