Research on the Correlation of BDI and SSE Composite Index: Empirical Analysis from the Years of 2007-2009

Abstract

The variations of Baltic Dry Index (BDI) and Shanghai Stock Exchange Composite Index (SSE Composite Index) over the last three years reflected the historical features of the world economy in financial crisis. In order to test the correlation of BDI and SSE Composite Index, the weekly average data of BDI and SSE Composite Index from 2007 to 2009 are taken as empirical sample data by statistical analyzing the curve graph and the scattered figure. The result indicates that BDI and SSE Composite Index are positively correlated. According to the empirical results, main conclusions are drawn as follows: First, SSE Composite Index accurately reveals China and the world's economy trend before and after the financial crisis. Second, the severe fluctuation of BDI reflects significant flux in shipping industry as a high-risk, high-return industry. Third, SSE Composite Index is more preferable than BDI as an indicator of China and the world's economy and shipping industry.