# Conditional Market Arbitrage Engine AI Agent Connect

> Identify risk-free arbitrage in conditional prediction markets using Bayesian probability.

## Overview
- **Category:** finance
- **Price:** Free
- **Endpoint:** https://edge.vinkius.com/vk_preview_wDbKhHoFJKGyEo9WH3iTVwUkFnLk8BQo4jcAr7mv/ai-agent-connect
- **Tags:** bayesian, prediction-markets, arbitrage, probability, finance

## Description

This MCP server provides deterministic tools to identify arbitrage opportunities in conditional prediction markets. By applying Bayes' theorem, it compares the observed price of a conditional market (B given A) against the theoretical price derived from base markets A and B. Use `analyze_conditional_arbitrage` to detect price deviations greater than 5% and receive specific trade instructions to lock in guaranteed returns. It also includes `verify_market_independence` to check if events are independent and `calculate_joint_probability_requirement` to determine the fair price for joint outcomes.

## Tools

### analyze_conditional_arbitrage
Evaluates the relationship between base markets and a conditional market to identify arbitrage opportunities

### calculate_joint_probability_requirement
Determines what the price of a "Both A and B" market should be based on existing conditional and base market prices

### verify_market_independence
Determines if the conditional market's price is consistent with the base market B, assuming event A has no influence on B

## Prompt Examples

**Prompt:** 
```
Find arbitrage opportunities where priceA is 0.6, priceB is 0.5, priceBGivenA is 0.7, and capital is 1000.
```

**Response:** 
```
Arbitrage detected! The theoretical conditional price is 0.4167, but the market price is 0.7. Deviation is 68%. Suggested trades: Buy market A for $400, Buy market B for $500, and Sell conditional market B|A for $700. Guaranteed return: $125.00.
```

**Prompt:** 
```
Check if market B at 0.4 and conditional market B|A at 0.4 are independent.
```

**Response:** 
```
The events are independent. The deviation is 0.0, meaning the occurrence of event A does not change the probability of event B.
```

**Prompt:** 
```
What should the joint probability be if priceA is 0.5 and priceBGivenA is 0.8?
```

**Response:** 
```
The calculated joint probability for both events occurring is 0.4.
```

## Frequently Asked Questions

**How does the arbitrage detection work?**
The engine uses `analyze_conditional_arbitrage` to calculate the theoretical conditional price using Bayes' theorem. If the market price deviates from this theoretical value by more than 5%, an arbitrage opportunity is flagged.

**Can I check if two events are independent?**
Yes, you can use the `verify_market_independence` tool to determine if the price of a conditional market is consistent with the base market, indicating whether event A influences event B.

**What is the output of an arbitrage analysis?**
The `analyze_conditional_arbitrage` tool returns the deviation percentage, the implied joint probability, and a list of `suggestedTrades` designed to capture the guaranteed return for your deployed capital.