Mineral and fossil fuel extraction policies: A diversified portfolio approach to managing price volatility

【Author】 Zhang, Yan; Bibi, Sidra; Dilanchiev, Azer

【Source】EXTRACTIVE INDUSTRIES AND SOCIETY

【影响因子】

【Abstract】This study analyses the effectiveness of a diversified portfolio approach to managing price volatility in the mineral and fossil fuel industries of China and Russia. The study examines the performance of a portfolio con-sisting of multiple minerals, metals and fossil fuels, and compares it to the performance of individual com-modities, with the goal of determining whether a diversified approach can effectively reduce volatility and increase returns. This study analyses data from the year 2000 to 2020, a period characterised by significant fluctuations in mineral and fossil fuel prices owing to global economic factors, geopolitical tensions, and tech-nological innovations. This study focuses on China and Russia, regions with significant mineral and fossil fuel reserves, and a history of volatility in commodity prices. The study finds that a diversified portfolio approach can effectively reduce volatility in the mineral and fossil fuel markets, leading to increased returns for investors. A portfolio consisting of multiple minerals and fossil fuels exhibits lower volatility and higher returns than a portfolio consisting of individual commodities. These findings suggest that a diversified portfolio approach is an effective strategy for managing price volatility in the mineral and fossil fuel industries in China and Russia.

【Keywords】Diversified portfolio; Metals; Price volatility; Mineral and fossil fuel industries; Risk management

【发表时间】2023 SEP

【收录时间】2023-09-02

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