| Abstract [eng] |
Stock market is one of the main parts of economy, without it it is impossible to imagine any modern country. The total value of the stock market can be taken as the whole world’s or a certain country’s, region’s economical evaluation. It is always impacted with various economical factors like inflation, unemployment rate, consumption rate, interest rates, fiscal and monetary policies and oil prices. This factor, as one of the factors to stock market, is studied in this work. According to Basher and Sadorsky (2006) oil prices is a modern economies blood. Thought it is not easy to forecast what the demand of oil will be in the coming years, but it is totally clear that demand is very strongly correlated with industrial evolution. While the economy is getting stronger the demand for energy (especially oil) is rising too. It is very important to know what is causing these variations, is it a long-term phenomenon and what changes it can make in the future. It is also very important to know what impact oil price has on economy. To properly understand this we need to analyze is there a relation between oil price and stock market. If this relation exists we need to measure it. In this work we analyze how oil prices impacts the stock market. Also we analyze what investment decisions you can make, according to oil prices and it changes. Research object – oil price impact to stock market. This works goal – to measure, how oil prices affect the stock market, and to give recommendations, how to invest according to oil price risks. To achieve this goal this tasks was set: • To determine the factors which has impact to stock and oil prices; • To analyze the correlation between oil prices and stock prices; • To select the trading strategies, according to strong correlation; • To make an indicator for protecting investments from oil price shocks; • To measure the efficiency of the indicator. • To analyze the results. This work contains of three main parts: In the first part of the work the oil price impact to the economies is analyzed. The importance of stock market is determined. In the second part of this work oil production and the impact of alternative fuels is analyzed, also the correlation between oil price and stock price is measured. In the last part of this work a technical indicator is made, which shows the existing risks level in stock market connected to oil price changes. Indicators profitability and perspectives is checked. In this work such conclusions have been made. Oil prices correlate only mildly with various stock market indexes. It is also notable that correlation exists stronger in the up’s of the market than down’s. An indicator “RISK” is made, which mostly is influenced by stock market future price changes. The profitability testing of indicator “RISK”, showed, that getting out of the market when the indicator is suggesting increases profitability by a reasonable amount. |
