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Oil Prices and Stock Prices of Alternative Energy Companies: Time Varying Relationship with Recent Evidence

Author

Listed:
  • Alex YiHou Huang

    (Finance Discipline, College of Management, Yuan Ze University, Taiwan)

  • Chiao-Ming Cheng

    (Ph.D. Program, College of Management, Yuan Ze University, Taiwan)

  • Wen-Cheng Hu

    (Ph.D. Program, College of Management, Yuan Ze University, Taiwan)

  • Chih-Chun Chen

    (Department of Management, Fo Guang University, Taiwan)

Abstract

This paper examines the recent interactive relationships between the crude oil prices and stock performances of alternative energy companies. The examination was conducted from 2001 to mid-2010, and the sample period is divided into three sub-periods according to two Middle East wars. Different dynamics of oil prices across these sub-periods are significantly documented for the first time. In recent years, oil prices have become significantly responsible for the stock performances of alternative energy companies. This finding suggests that the stock market investors of the alternative energy sector have only recently incorporated oil price shocks into their trading decisions. The volatility spillover effect between oil prices and the stock index of the alternative energy sector has also been established in recent years. This latest evidence on the interaction between the two markets is shown for the first time in the literature and should be well used by market participants.

Suggested Citation

  • Alex YiHou Huang & Chiao-Ming Cheng & Wen-Cheng Hu & Chih-Chun Chen, 2012. "Oil Prices and Stock Prices of Alternative Energy Companies: Time Varying Relationship with Recent Evidence," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 8(2), pages 221-258, July.
    • Handle: RePEc:jec:journl:v:8:y:2012:i:2:p:221-258
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    Citations

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    Cited by:

    1. Shah, Imran Hussain & Hiles, Charlie & Morley, Bruce, 2018. "How do oil prices, macroeconomic factors and policies affect the market for renewable energy?," Applied Energy, Elsevier, vol. 215(C), pages 87-97.
    2. Kazemilari, Mansooreh & Mardani, Abbas & Streimikiene, Dalia & Zavadskas, Edmundas Kazimieras, 2017. "An overview of renewable energy companies in stock exchange: Evidence from minimal spanning tree approach," Renewable Energy, Elsevier, vol. 102(PA), pages 107-117.

    More about this item

    Keywords

    crude oil price; alternative energy; oil stock index; VAR;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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