Estimating the portfolio risk with Copula-GARCH-EVT method: Empirical study of carbon market

Ting Li, Zhi Gang Zhang, Lu Tao Zhao

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

3 Citations (Scopus)

Abstract

With the rapid growth of the carbon market, carbon price fluctuations are increasingly important for market participants. Carbon market risk directly affects the investor confidence and emission reduction results. In this paper we use Copula-GARCH-EVT model to calculate the Value-at-Risk of carbon futures via Monte Carlo method and demonstrate that GARCH-EVT model is the proper marginal distribution, it has higher accuracy than other marginal distribution models. The method of Copula is better than the traditional covariance metric method.

Original languageEnglish
Title of host publicationChemical and Mechanical Engineering, Information Technologies
Pages2175-2178
Number of pages4
DOIs
Publication statusPublished - 2013
Externally publishedYes
Event2013 3rd International Symposium on Chemical Engineering and Material Properties, ISCEMP 2013 - Sanya, China
Duration: 22 Jun 201324 Jun 2013

Publication series

NameAdvanced Materials Research
Volume791
ISSN (Print)1022-6680

Conference

Conference2013 3rd International Symposium on Chemical Engineering and Material Properties, ISCEMP 2013
Country/TerritoryChina
CitySanya
Period22/06/1324/06/13

Keywords

  • Carbon market
  • Copula function
  • GARCH-EVT method
  • Portfolio VaR

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