Australian Coal Company Risk Factors: Coal and Oil Prices

The International Journal of Business and Finance Research, v. 8 (1) p. 57-67

11 Pages Posted: 5 Feb 2014

See all articles by M. Zahid Hasan

M. Zahid Hasan

University of Notre Dame Australia - School of Business

Ronald A. Ratti

Western Sydney University - Department of Economics & Finance

Date Written: 2014

Abstract

Examination of panel data on listed coal companies on the Australian exchange over January 1999 to February 2010 suggests that market return, interest rate premium, foreign exchange rate risk, and coal price returns are statistically significant in determining the excess return on coal companies’ stock. Coal price return and oil price return increases have statistically significant positive effects on coal company stock returns. A one per cent rise in coal price raises coal company returns by between 0.15% and 0.17%. A one per cent rise in oil price raises coal company returns by between 0.06% and 0.08%. The sensitivity of stock prices to oil price shocks suggest a role for investment in stocks that rise when energy prices increase in a well balanced portfolio and in pursuing profitable investment strategies.

Keywords: Coal Stock Price; Coal Price; Oil Price

JEL Classification: G12; G15; Q4

Suggested Citation

Hasan, M. Zahid and Ratti, Ronald A., Australian Coal Company Risk Factors: Coal and Oil Prices (2014). The International Journal of Business and Finance Research, v. 8 (1) p. 57-67, Available at SSRN: https://ssrn.com/abstract=2321231

M. Zahid Hasan (Contact Author)

University of Notre Dame Australia - School of Business

Australia

Ronald A. Ratti

Western Sydney University - Department of Economics & Finance ( email )

Sydney, NSW 1797
Australia

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