Abstract
With the further development of power market reform, the demand for energy trading entities to avoid the risk of electricity price is becoming more and more prominent. This paper uses the method of minimizing the variance of the portfolio return rate combined with the electricity futures price data from the European Energy Exchange to estimate the optimal hedging ratio and perform the residual test. Finally, the decision of power producers to use the power futures hedging strategy to avoid the risk of spot price fluctuations will be discussed.
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