Abstract
Renewable energies have increased in importance in recent years due to the harm caused to the environment by fossil fuels. As a result, renewable energy companies seem to be profitable investment opportunities given their likely substantial future earnings. However, previous empirical evidence has not always agreed about this likely profitability. In addition, the methodologies employed in the existing empirical literature are complicated and not feasible for most investors to use. Therefore, it is proposed an approach which combines the use of performance measures, screening rules, devolatized returns and portfolio strategies, all of which can be implemented by investors. This approach results in high cumulative returns of more than 200% and other positive ratios, even when transaction costs are considered. This should encourage people to invest in these renewable energies and contribute to improving the environment.
Highlights
Financial Methods for Improving theIn the transition to sustainable finance, it is crucial to properly combine sustainable development goals with profitable investments in order to show investors the benefit of investing in these new markets and, the importance of supporting their development
In order to visualize the different performances of these companies over time, in Figure 1 we set out their daily closing graphs
Having a rolling window to estimate the performance measures that condition portfolio composition resulted in the use of an out-of-sample period which runs from 4 January matics 2021, 9, x FOR PEER REVIEW
Summary
In the transition to sustainable finance, it is crucial to properly combine sustainable development goals with profitable investments in order to show investors the benefit of investing in these new markets and, the importance of supporting their development. Renewable energy companies are a key instrument for achieving the sustainable development goals because they increase access to clean energy, reduce our reliance on fossil fuels and respect land tenure, among other benefits. Renewable energy companies, have undeniable potential and advantages. This is partly because they do not produce greenhouse-gas emissions, and help improve the environment, and because they help solve energy problems because they can be located anywhere, as highlighted by Halkos and Gkampoura [1]. Renewable energies are considered the best option for supplying future energy demands
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