Risk management
A matter of principal
Developing term structure models can be tricky, as unknown factors and non-observable variables can affect futures prices. But principal components analysis is useful in tackling these problems. Here, Delphine Lautier uses PCA to pin down price movements…
Credit in the limelight
Today's business climate is pushing credit risk higher up the risk management agenda, as our Energy Credit Risk conference in New York showed. Stella Farrington reviews the event
Top of the agenda
Energy Risk's inaugural risk management survey reveals what you consider the biggest challenges, greatest fears and chief problems facing risk managers today, and what changes you would like to see in the future
The right of refusal
Traders have learned that giving away free financial options can be costly. However, free options can take many forms. Brett Humphreys and Tamara Weinert discuss the value of a risk management option that can easily be given away
Decisions, decisions
Where next for the price of a barrel of oil? It’s an important question for producers and consumers, for whom managing oil price risk has never been more crucial. Oliver Holtaway finds that the answer to that question is not necessarily ‘up’.
Doctor’s orders
Should you try to hedge a physical asset by simply selling its expected output? Neil Palmer shows how, in some scenarios, either under- or over-hedging could make more sense
The hedging effect
The effect of hedging on a project’s net present value can be difficult to determine. Brett Humphreys shows how different types of hedging affect the distribution and the expected return of a project
Taking the screen test
Screen trading is spreading faster than ever in the energy markets and market dynamics are changing as a result. Do interdealer brokers in the market see this advance as a threat or an opportunity? Stella Farrington finds out
Raising the standard
Growth in energy trading has led to a need for better standardisation of contracts and integration of exchanges and trading hubs. But more needs to be done to simplify and streamline the trading process, says Wolfgang Ferse
Amerex's Prokop joins Energy Data Hub board
The Energy Data Hub has appointed Mike Prokop, senior vice president at energy brokerage Amerex, to its board of directors.
Risk management key for freight, says Baltic Exchange chief
Baltic Exchange chief executive Jeremy Penn has stressed the importance of risk management at a forum of freight derivatives brokers and traders this week.
LCH.Clearnet launches OTC clearing for freight derivatives
LCH.Clearnet has launched an OTC clearing service for the forward freight agreements (FFAs).
Trading routes open
The coal and dry bulk shipping markets are tightly intertwined and the strong influence of each on the other provides some interesting arbitrage opportunities, which are starting to draw wider attention, writes Barry Parker
Coal facing changes
Coal derivatives trading is gaining popularity among coal consumers, producers and financial institutions in Europe, according to a recent survey of market players. Cyriel de Jong and Kasper Walet discuss the study’s results
James Tweed and Dave Wardley
At the end of last year, JAMES TWEED and DAVE WARDLEY launched the first hedge fund dedicated solely to trading freight. Stella Farrington meets them
A disciplined approach
E&P companies tend not to strategically hedge in a rising market. But there are good reasons for them to do so, and some are sticking to their hedging strategies, despite suffering losses on their derivatives contracts. By Joe Marsh
Pieces of a puzzle
To get enterprise-wide risk management to work, a firm needs to piece together the right models, processes and software – and the right attitude. US utility Allegheny Energy has done just that, finds Oliver Holtaway
Understanding Sam
The Samuelson Effect – backwardation in the term structure of forward volatility – can lead to valuation inaccuracies. In capturing the Samuelson Effect in energy derivatives valuation, analysts have tried both historical approaches and those that rely…
Hoodwinked!
Have you got a good grip on your view of volatility and correlation? Neil Palmer shows that, thanks to ever -present measurement errors, even the steadiest markets can throw up big surprises
Great expectations?
Risk and expectation are two sides of the same coin. But could you quantify your own risk appetite? explores some ways to put a price tag on those hazards you can’t avoid Neil Palmer