Why Use A Statistically Based Charting Product to Manage Energy Price Risk?

Posted by Cynthia A. Kase on February 15th, 2019

Companies who actively participate in commodity transactions such as natural gas and crude oil should develop a hedging strategy so that they are able to mitigate their price risk. Such a strategy can help to avoid unfavourable pricing conditions that can occur due to market movements.

A statistically based hedging product such as Kase HedgeModel helps identify when to hedge, which maturity to use, how to scale in, and when to restructure. It can be an asset for companies who produce and consume energy commodities and look to mitigate their risk exposure. The right and timely advice by an expert energy market analyst can then further assist in devising a road map on hedging with options, futures and energy derivatives.

Why Use Statistical Models?

The right decision regarding the price of natural gas and the time to hedge, are key to ensuring that your natural gas hedging program is successful. It makes sense to introduce a statistical model into your overall strategy. This will help provide you with real-time scientifically analyzed data, which in turn enables you to figure out the energy market’s price cycles. As a consequence, this model gives you the confidence of making the right moves with respect to the right time to hedge, the right maturity to use, and the best derivate to meet your strategic objectives.

Traders Find Value in Statistical Analysis of the Natural Gas

Companies that utilize and produce energy commodities like natural gas require an effective energy hedging plan to face the challenges posed by the volatile energy markets. These companies, including the energy risk managers, often turn to technical analysis and statistical analysis for making a realistic judgement of their risk exposure.

The use of technical and statistical analysis can help energy risk managers determine market cycles and when to hedge. It also helps them determine the exposure to hedge, what types of instruments to use, and when to remove or restructure hedges. As such, these methods can help to achieve any company’s energy risk management goals based on their unique risk appetite.

Conclusion

A company looking to develop an effective natural gas hedging strategy should use a statistically based hedging product. In this way they can improve their risk management strategy tremendously.

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Cynthia A. Kase

About the Author

Cynthia A. Kase
Joined: February 15th, 2019
Articles Posted: 1