Hedging

Inventory management – Some effects of risk pooling

Inventory management – Some effects of risk pooling

This entry is part 3 of 4 in the series Predictive Analytics

We have thus shown through Monte-Carlo simulations, that the benefits of pooling will increase with the number of locations and that the benefits of risk pooling can be calculated without knowing the closed form of the demand distribution.

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Corn and ethanol futures hedge ratios

Corn and ethanol futures hedge ratios

This entry is part 2 of 2 in the series The Bio-ethanol crush margin

We are here looking for hedge models and hedge ratio estimations techniques that are “good enough” and that can fit into valuation models using Monte Carlo simulation. The model have to be dynamic in the sense that as new data (contracts) becomes available it can read the data, perform the necessary statistical analysis, produce the hedging coefficients and do the simulations – in one go.

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The probability distribution of the bioethanol crush margin

The probability distribution of the bioethanol crush margin

This entry is part 1 of 2 in the series The Bio-ethanol crush margin

In the following we will illustrate some of the risks the bioethanol producer is facing using corn as feedstock. However, these risks will persist regardless of the feedstock and production process chosen.

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