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How to discriminate market conditions based on its price jump information? A result in EU ETS

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Different from common commodity markets, carbon futures market is an emerging and policy driven market, showing special fluctuations in its price. In this paper, with the aim at exploring the market development status of European Union Emission Trading Scheme (EU ETS), we propose jump existence test and jump type test to capture jump information (jump intensity and jump amplitude). Through the comparison of jumps in oil futures price, we find jumps in carbon futures market are not significant in high sampling frequency (15 minutes and 30 minutes) but significant in low sampling frequency (45 minutes and 60 minutes). And large and finite jumps as well as small and infinite jumps are both occurred in this market. Analyzing these results, we suspect that carbon futures market is a weak efficient market with low liquidity. In addition, investors should select different trading strategies based on their trading frequency to hedge jump risks.

Original languageEnglish
Title of host publication2018 International Conference on Information Management and Processing, ICIMP 2018
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages77-81
Number of pages5
ISBN (Electronic)9781538636558
DOIs
StatePublished - 26 Mar 2018
Externally publishedYes
Event2018 International Conference on Information Management and Processing, ICIMP 2018 - London, United Kingdom
Duration: 12 Jan 201814 Jan 2018

Publication series

Name2018 International Conference on Information Management and Processing, ICIMP 2018
Volume2018-January

Conference

Conference2018 International Conference on Information Management and Processing, ICIMP 2018
Country/TerritoryUnited Kingdom
CityLondon
Period12/01/1814/01/18

Keywords

  • EU ETS
  • Jump information
  • Jump test
  • Market condition

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