2024R2

Two-Island Arbitrage & Weather Algos: Round 2 Deep Dive

The Round 1 results are out – overall rank #27, which is pretty good!

Manual portion: Ranked 700+ (quite low), but the score difference with #1 is less than 1 point. Not sure how the scoring works exactly—might be random variation or decimal inputs allowed in previous rounds—but anyway, the difference is negligible.

Round 2 Manual: Same as last year, so I won’t go into details (refer to previous posts). My result was:
shell → pizza → wasabi → shell → pizza → shell
Profit: 1.0569693888

Round 2 Algo (New This Year): Trading orchids, with two key opportunities:

1️⃣ Arbitrage Between Islands:

Two orderbooks:

⦁ Local (main island): Standard bid/ask prices

⦁ Southern Island: Provides bid/ask but with additional costs:

   ⦁ Real bid price = Southern bid − export tariffs − transport fees

   ⦁ Real ask price = Southern ask + import tariffs + transport fees

Example:

⦁ Local: bid=1008, ask=1016

⦁ Southern (adjusted): real bid=1018, real ask=1022

⦁ Arbitrage: Buy locally at 1016 → convert → sell in South at 1018 → +2 profit

Implemented Arb Bot v1: Current profit ~2k.

2️⃣ Weather-Based Position Taking:
Orchid prices are influenced by:

Sunlight:

⦁ Observation gives instantaneous sunlight rate (per hour)

⦁ Baseline average = 2500

⦁ If daily sunlight <7h: Every 10min shortfall → 4% yield drop

Humidity:

⦁ Ideal range: 60-80

⦁ Outside range: Every 5-point deviation → 2% yield drop

Preliminary Ideas:

⦁ Humidity:

   ⦁ Below 60: Buy if humidity ↓ (negative correlation, scarcity drives prices up)

   ⦁ Above 80: Buy if humidity ↑ (positive correlation, excess dryness harms yield)

⦁ Sunlight: Still brainstorming (to be tested).

Key Takeaways:

⦁ Arbitrage is live and profitable (bot v1 working).

⦁ Weather-dependent strategies need backtesting—recorded here for future refinement.

Happy trading!

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