Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Bottom-Up

<ul>
<li>
Context: The <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a> vs. <a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance (BAF IN)</a> price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.</li>
<li>
Highlights: Going long <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a> and short <a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance (BAF IN)</a> targets a 9% return, with the long position supported by cheaper valuations.</li>
<li>
Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.</li>
</ul>



Context: The Kotak Mahindra Bank (KMB IN) vs. Bajaj Finance (BAF IN) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.

Highlights: Going long Kotak Mahindra Bank (KMB IN) and short Bajaj Finance (BAF IN) targets a 9% return, with the long position supported by cheaper valuations.

Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.


Long Kotak Mahindra (KMB IN) Vs. Short Bajaj Finance (BAF IN): Statistical Arbitrage in Indian Banks

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>MFI Stress Peaks; Credit Costs to Taper Gradually: The stress in the MFI has peaked, and slippages in this segment are expected to gradually taper from H2 onwards.</li><li>Similarly, the asset quality challenges in the Personal Loans (PL) and Credit Card (CC) segments have stabilised.</li><li>The bank is witnessing emerging stress in the retail CV segment. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

MFI Stress Peaks; Credit Costs to Taper Gradually: The stress in the MFI has peaked, and slippages in this segment are expected to gradually taper from H2 onwards.Similarly, the asset quality challenges in the Personal Loans (PL) and Credit Card (CC) segments have stabilised.The bank is witnessing emerging stress in the retail CV segment. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kotak Mahindra Bank Ltd. - MFI Stress Peaks; Looking to Accelerate Growth in Credit Cards and PL

<ul><li>FY25 was a tough year for Kotak Mahindra Bank (KMB) with the regulatory restrictions on digital on-boarding of customers through the 811 channel and issuing new credit cards, hampering credit growth and weighing on margins for most of the year.</li><li>Despite these challenges, KMB utilised the embargo period to define its go-to-market strategy alongside digitising and automating the customer journey to ensure the easing of banking, while overhauling its tech infrastructure and capabilities.</li><li>The bank’s focus remained on growing the secured assets while maintaining asset quality. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FY25 was a tough year for Kotak Mahindra Bank (KMB) with the regulatory restrictions on digital on-boarding of customers through the 811 channel and issuing new credit cards, hampering credit growth and weighing on margins for most of the year.Despite these challenges, KMB utilised the embargo period to define its go-to-market strategy alongside digitising and automating the customer journey to ensure the easing of banking, while overhauling its tech infrastructure and capabilities.The bank’s focus remained on growing the secured assets while maintaining asset quality. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kotak Mahindra Bank Ltd. - Potentially Faster NIM Recovery and Growth Pick-Up to Aid Re-Rating!

<ul>
<li>
Context: This article provides an update on a previously identified pair trading opportunity between <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a> and <a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance (BAF IN)</a>, based on statistical mean reversion analysis.</li>
<li>
Key Insights: The trade has now reached its exit signal as the price ratio reverted to its one-standard deviation band, yielding a +4.7% return.</li>
<li>
Why Read It: For investors interested in quantitative trading strategies, this article demonstrates how statistical arbitrage can generate short-term alpha and highlights actionable similar opportunities in the current market.</li>
</ul>



Context: This article provides an update on a previously identified pair trading opportunity between Kotak Mahindra Bank (KMB IN) and Bajaj Finance (BAF IN), based on statistical mean reversion analysis.

Key Insights: The trade has now reached its exit signal as the price ratio reverted to its one-standard deviation band, yielding a +4.7% return.

Why Read It: For investors interested in quantitative trading strategies, this article demonstrates how statistical arbitrage can generate short-term alpha and highlights actionable similar opportunities in the current market.


Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN) - Trade Exit and Take Profit

<ul>
<li>The <a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance Ltd (BAF IN)</a> vs. <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a> Price-Ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.</li>
<li>While one of the two companies displays higher revenue growth, the valuation might begin to become stretched. Fundamental key figures are provided to complement the statistical analysis.</li>
<li>Trade setup, statistical properties, factor exposure, risk management strategies, and key events are discussed.</li>
</ul>


The Bajaj Finance Ltd (BAF IN) vs. Kotak Mahindra Bank (KMB IN) Price-Ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
While one of the two companies displays higher revenue growth, the valuation might begin to become stretched. Fundamental key figures are provided to complement the statistical analysis.
Trade setup, statistical properties, factor exposure, risk management strategies, and key events are discussed.


Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN): A Relative Value Play

India

Kotak Mahindra Bank Limited is a full service commercial bank. The Bank offers a wide range of products and services such as personal, commercial, and corporate banking services, including deposit accounts, loans, and investments. Kotak Mahindra Bank serves customers in India.

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Kotak Mahindra Bank (KMB IN)

Long Kotak Mahindra (KMB IN) Vs. Short Bajaj Finance (BAF IN): Statistical Arbitrage in Indian Banks

Pair trade targeting a 9% return, leveraging valuation gaps and mean-reversion dynamics between Kotak Mahindra and Bajaj Finance.

Gaudenz Schneider

Kotak Mahindra Bank Ltd. - MFI Stress Peaks; Looking to Accelerate Growth in Credit Cards and PL

MFI Stress Peaks; Credit Costs to Taper Gradually: The stress in the MFI has peaked, and slippages in this segment are expected to gradually taper...

Axis Direct

Kotak Mahindra Bank Ltd. - Potentially Faster NIM Recovery and Growth Pick-Up to Aid Re-Rating!

Asset quality challenges were visible in the unsecured segments, while secured segments continued to behave well. Asset quality remained steady in...

Axis Direct

Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN) - Trade Exit and Take Profit

Update on pair trading opportunity between Kotak Mahindra Bank and Bajaj Finance. The pair has profitably mean-reverted, showcasing the potential...

Gaudenz Schneider

Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN): A Relative Value Play

The Price-ratio between Bajaj Finance Ltd and Kotak Mahindra Bank signals a potential relative value opportunity. Trade setup, risk management,...

Gaudenz Schneider

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Long Kotak Mahindra (KMB IN) Vs. Short Bajaj Finance (BAF IN): Statistical Arbitrage in Indian Banks

Pair trade targeting a 9% return, leveraging valuation gaps and mean-reversion dynamics between Kotak Mahindra and Bajaj Finance.

Gaudenz Schneider

Kotak Mahindra Bank Ltd. - MFI Stress Peaks; Looking to Accelerate Growth in Credit Cards and PL

MFI Stress Peaks; Credit Costs to Taper Gradually: The stress in the MFI has peaked, and slippages in this segment are expected to gradually taper...

Axis Direct

Kotak Mahindra Bank Ltd. - Potentially Faster NIM Recovery and Growth Pick-Up to Aid Re-Rating!

Asset quality challenges were visible in the unsecured segments, while secured segments continued to behave well. Asset quality remained steady in...

Axis Direct

Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN) - Trade Exit and Take Profit

​Update on pair trading opportunity between Kotak Mahindra Bank and Bajaj Finance. The pair has profitably mean-reverted, showcasing the potential...

Gaudenz Schneider

Bajaj Finance (BAF IN) Vs. Kotak Mahindra Bank (KMB IN): A Relative Value Play

​The Price-ratio between Bajaj Finance Ltd and Kotak Mahindra Bank signals a potential relative value opportunity. Trade setup, risk management,...

Gaudenz Schneider

Update on pair trading opportunity between Kotak Mahindra Bank and Bajaj Finance. The pair has profitably mean-reverted, showcasing the potential...

The Price-ratio between Bajaj Finance Ltd and Kotak Mahindra Bank signals a potential relative value opportunity. Trade setup, risk management,...