Published Online:January 2025
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:IJARAP210125
DOI:10.71329/IUPJARAP/2025.24.1.382-396
Author Name:Shree Jyothi Koutha
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:382-396
Commodity derivatives have been widely researched due to their properties such as diversification, hedge, and safe haven characteristics with many studies explaining the relationship between these instruments and geopolitical risks (GPR). The present study explores the interconnectedness between GPR and base metal commodity derivatives traded in India. The uniqueness of the study lies in applying wavelet coherence analysis to explain the connectedness between GPR and base metal commodity derivatives. The daily data of GPR index and MCX-COMDEX index of five metals, i.e., aluminum, copper, lead, zinc and nickel, are considered. The period of study is from 2016 to 2023, and the study focuses on unforeseen events like Russia-Ukrainian war, Covid-19 pandemic, etc., which have impacted the returns from base metal trading in India. The empirical findings provide new insights for investors on making better investment decisions; for exchanges and regulators on taking timely policy decisions; and for academicians on examining this area further in future.
Finance literature includes studies on commodity derivatives by Ahmadi et al. (2016), Baffes et al. (2018), and Antonakakis et al. (2020), to name a few. The indispensable role played by base metal commodities like aluminum, copper, etc. affects a variety of market participants operating in the market (Li et al., 2022).