Notes On Trading Commodities And Currencies

The extracted data used includes monthly returns from January 1972 to July 2011. The assets are selected so that the portfolio contains the largest, most liquid, and most tradable assets. The choice of such a variety of assets across several markets was used in order to generate a large cross sectional dispersion in average return. It helped to reveal new factor exposure and define a general framework of the correlated value and momentum effects in various asset classes.

Advisors and investors would do well to pay as much attention to the expected volatility of any portfolio or investment as they do to anticipated returns. Moreover, all things being equal, a new investment should only be added to a portfolio when it either reduces the expected risk for a targeted level of returns, or when it boosts expected portfolio returns without adding additional risk, as measured by the expected standard deviation of those returns. Lesson 2: Don’t assume bonds or international stocks offer adequate portfolio diversification. As the world’s financial markets become more closely correlated, bonds and foreign stocks may not provide adequate portfolio diversification. Instead, advisors may want to recommend that suitable investors add modest exposure to nontraditional investments such as hedge funds, private equity and real assets. Such exposure may bolster portfolio returns, while reducing overall risk, depending on how it is structured. Lesson 3: Be disciplined in adhering to asset allocation targets. The long-term benefits of portfolio diversification will only be realized if investors are disciplined in adhering to asset allocation guidelines. For this reason, it is recommended that advisors regularly revisit portfolio allocations and rebalance

Currently we are holdings RM3millions to trade futures contract in order to generate larger profits. As a speculators who trades derivatives, we trade at a higher-than-average risk in return for a higher-than-average profit potential. We are taking larger risk, so we are anticipating future price movements, in the hope of making quick and larger gains.

X- C. The composition of the optimal international portfolio is identical for all investors of a particular country, whether or not they hedge their risk with currency futures

Understanding the fact, that falling commodity prices and rising dollar cannot last indefinitely, and maybe even bottomed out for now, I see a lot of perspectives within these markets in one year period. Moreover, a lot of forecasters expect inflation to move toward two percent goal during this year, which will result in substantial rise in commodity prices. Although, it is a controversial issue according to the FED projections for the current and the next year, which have been lowered from previous numbers (Table#1).

Mining; Sierra Leone is rich in natural resources available to be mined. By increasing investment in and receiving international support for this industry, Sierra Leon can

BHP Billiton is the world’s top producers of major commodities. China, as BHP Billiton’s largest export market, demand strongly influences the BHP Billiton’s operation (Western Australian Iron Ore Industry Profile 2015). According to the annual report of BHP Billiton (2015), China brought about 36.6% revenue in the amount of total export revenue for BHP Billiton, among the largest product is Iron Ore, which was 66% in 2015. Meanwhile, the forecast of iron ore will continue to increase production. However, Chinese steel consumption may growth slow next few years (shows in figure 1) because the real estate industry decline (Mark 2015). Therefore, oversupply and weaker demand may create the fluctuations in commodity prices which related to commodity risk.

Falling commodity prices test purchasing strategies and lead to questions about whether to lock in prices or adopt a wait. In other words, should investors be a buyer of the asset class or seller?

Diversified miners' stocks can trade at discount valuations to pure plays. Investors interested in gaining exposure to a specific commodity are better off buying pure plays.

Canada has a long history in mining of a number of minerals which include copper, nickel, Uranium, potash, gold and diamonds among others. It also has a refining industry which makes it a producer of aluminium and refined copper and nickel. Foreign capital has always played a role in the development of the mining industry until recently when the domestically controlled companies have begun to play a more significant role. The mining industry has once being under a brief wave of nationalisation which resulted in a restrictive foreign investment regime. And now a relatively liberal regime has been in place. Foreign direct investment flows to the mining sector have increased rapidly recent growing from under $5 billion to over $20 billion from

For my paper, I wanted to analyze the validity of the Efficient Market Hypothesis and evaluate patterns in trading. As an investor, one of the fundamental measures that I use is the tendency of commodities to follow seasonal patterns due to the nature of planting and harvesting periods, supply/demand, and general weather patterns which all impact the price of commodities. The purpose of this study is to investigate the existence the effect in investment returns for different markets.

Natural resources such as fuel and mining products also play a key role in the world trade, because every country needs to satisfy its needs of those resources, especially if such resources are not available in a country. Countries such as Russia, Saudi Arabia, Qatar, Nigeria and Venezuela base their exports on fuel and mining products, especially crude petroleum and petroleum gas.

To create a competitive advantage, a mine has to properly manage its exposure to gold price fluctuations. This is not an easy thing to do since there are so many factors to consider: when, how much, and how to hedge the gold production. Firms in this industry differentiate themselves based on the risk management strategies they implement. Furthermore, mines should also be able to minimize the cost of gold production along with making large sunk costs. Operating in

From its definition it can be noticed that hedging is a strategy employed by companies in an effort to safeguard their economic position and to prevent the company from the losses which are associated with the unforeseen risks. Companies can hedge against risks which are associated with losses by taking control of their future purchases. The commodity prices vary in different markets and are caused or influenced by different economic factors. Some commodities are very scarce and with the increased depletion subject to the global demand in different foreign markets, the prices are set to be hiked in response to the established demand which positions the companies that use those particular commodities to have cash flow problems.

After the completion of extensive research on the inner workings of Hong Kong we must pick a specific industry to invest in within the financial market. The industry that we would like to concern ourselves with is the Precious Gems and Metals