Diversification Opportunities Research Articles

Do socially responsible indices outperform conventional indices? Evidence from before and after the onset of Covid‐19

AbstractAccording to traditional portfolio theories constraints, restrictions, and screens applied in portfolio selection reduces the diversification opportunities which can impact financial performance. Is this true in the case of socially responsible investment (SRI)? To answer this, present study analyzes the performance of Socially Responsible (SR) indices in comparison to conventional indices in an emerging economy. The uniqueness of the study is that it analyses the performance of Shariah, ESG, and thematic indices in a single study. Further, the study measures the impact of Covid‐19 on them. Comparative performance evaluation was conducted by using absolute return analysis and risk‐adjusted measures namely, Sharpe ratio, Treynor ratio, tracking error, information ratio, capital asset pricing model (CAPM), Fama–French three‐factor, and Carhart's four‐factor models. The Structural break was identified, hence analysis was conducted for the total period (January 2017–March 2023) and two sub‐periods, that is, pre and post‐Covid‐19 period. No significant difference was found between the returns of SR indices and conventional indices as against the benchmark index on the basis of absolute return analysis. Sharpe ratio and Treynor ratio both were having negative values for all the SR and conventional indices. Tracking error for all the SR and Conventional indices were very low. The CAPM and both multi‐factor models univocally pointed toward the underperformance of all the SR (except S&P BSE 100 ESG index which had equal performance) and both conventional indices against the benchmark index. Noteworthy point is that only Shariah indices gave the highest returns during post‐Covid period. This research will help in deepening the SRI in the capital market. Companies should increase their ESG scores and make efforts to be listed on the SR indices. Policymakers should announce some kind of rebates, or recognition for star‐performing companies in the field of sustainability to encourage other companies to adopt SR practices in their business operations. The novelty of the current study is that it adds to the socially responsible literature by analyzing the performance of Shariah, ESG, and Thematic indices and conventional indices in a single study in the fastest‐growing economy of India and analyses the impact of Covid‐19 on this performance.

Challenges and Opportunities of Livelihood Diversification in Ethiopia: A Review Article

Diversifying sources of income has been recognized as a crucial approach to alleviate poverty, mitigate food insecurity, and enhance the overall well-being of rural residents in Ethiopia. This review outlines the key challenges and opportunities associated with livelihood diversification in the country. The study identifies several primary constraints that hinder livelihood diversification, including inadequate infrastructure development, scarcity of arable land, limited access to credit services, gender disparities, and poor rural-urban linkages. However, it also highlights potential avenues for sustainable livelihoods through diversification, such as the promotion of sustainable land management practices, adoption of climate-resilient agricultural strategies, and the provision of training and capacity building programs. To facilitate successful livelihood diversification, the review emphasizes the urgency of investing in infrastructure development and ensuring access to credit services. Moreover, it underscores the importance of promoting gender equality to mitigate the challenges faced by women in diversifying their livelihoods. Encouraging sustainable land management practices, implementing climate-resilient agricultural strategies, and providing comprehensive training and capacity building programs are identified as critical measures to support diversification efforts in Ethiopia effectively. The review offers evidence-based policy recommendations to inform government agencies, non-governmental organizations (NGOs), and other stakeholders on effective strategies that can enhance livelihood diversification in the country, while also ensuring inclusivity and sustainability. The significance of livelihood diversification within Ethiopia's development agenda cannot be overstated, and it is imperative for stakeholders to act in addressing the identified challenges and capitalizing on the opportunities presented by diversification. By doing so, they can contribute to poverty reduction and sustainable development in the country. However, it is essential to note that further research is necessary to explore the efficacy of livelihood diversification strategies in different contexts and identify additional opportunities and challenges that may arise.

Estimating growout production costs of commercial‐scale marine finfish production in southern tier US states

AbstractIncreased interest in marine fish farming in the United States has led to a need for fundamental economic information on production of candidate species for commercialization in various production systems. Funding for the project targeted those species with potential for production in southern tier states in the United States. Sufficient technical data were found to develop comprehensive budget analyses to estimate growout production costs for four scales of production for each of 10 species with potential for production in ponds, 13 in recirculating aquaculture systems (RAS), and five in net pens. The choice of species/production system scenarios was based on evidence of successful production on farms or in research. Estimation of production costs with enterprise budgets can provide useful guidance to identify the types of improved efficiencies that have the greatest effect on economic viability even when commercial farm data are not available. Commercial farm data were used where available, but for most species, data were available only from studies conducted under research conditions. Per‐kg costs of production were lowest for net pen production, followed by ponds, with production costs in RAS two to five times greater than in ponds or net pens. Ponds and net pens generally exhibited greater efficiency of use of capital assets across species than did RAS that resulted in lower percentages of fixed costs and lower annual costs per kg of fish produced. All five species evaluated for net pen production were estimated to be profitable, including redfish, Sciaenops ocellatus (also known as red drum), striped bass, Morone saxatilis, cobia, Rachycentron canadum, red snapper, Lutjanus campechanus, and seriolids (generic budget for almaco jack, Seriola rivoliana, California yellowtail, Seriola lalandi, and greater amberjack, Seriola dumerili), four in ponds (redfish, hybrid drum, ♀Pogonias cromis × ♂Sciaenops ocellatus, black sea bass, Centropristis striata, and cobia), but none of the RAS scenarios showed profitability at average yields (kg/cubic meter) reported in the literature. Comprehensive data on growout production of marine finfish species in the United States is generally lacking, and there is a strong need for production trials conducted under near‐commercial conditions with an endpoint of market‐sized fish. Production trials should be conducted in ponds (≥0.1 ha), net pens, and RAS tanks of a size that simulate commercial production conditions. Adequate production trial databases would provide opportunities to develop economic optimization models that would provide useful guidance for prospective producers. Average yields (kg/cubic meter) in RAS will need to be much greater than currently reported in the research literature for RAS production to be economically sustainable. Net pen production appears to be profitable in the United States, but effective permitting procedures are not in place. Providing research support for the US redfish sector that has developed effective production and marketing models could serve as a foundation for developing additional species and offer opportunities for diversification on marine finfish farms.

Energy transition and sustainable development in Malaysia: Steering towards a greener future

In the evolving landscape of global energy dynamics, Malaysia stands as a pivotal example of a nation actively transitioning towards renewable energy and sustainable development. This paper provides a comprehensive analysis of Malaysia's energy sector transformation, underpinned by the government's commitment to reducing carbon emissions and mitigating the impacts of climate change. The objective of this research is to delve into the intricacies, opportunities, and challenges of steering Malaysia towards a greener future, with a particular focus on the shift from reliance on fossil fuels to the adoption of renewable energy sources such as solar, wind, and biomass. Employing a mixed-method approach, this study synthesizes existing literature, policy documents, and case studies to examine the current state and historical context of energy use in Malaysia, analyze government initiatives and policy frameworks, explore technological advancements, and assess the environmental and socioeconomic impacts of the energy transition. Results indicate that despite facing challenges such as financial investment, technological advancement, and public acceptance, collaborative efforts between the government, private sector, and communities have led to significant progress in promoting renewable energy. The paper concludes that Malaysia's energy transition represents a critical step towards achieving a balance between economic growth and environmental preservation, setting a precedent for sustainable development in the Southeast Asian region. This transition is not only essential for climate change mitigation but also presents opportunities for economic diversification, energy security, and social inclusivity. The study ultimately calls for continued innovation, supportive policies, and international cooperation to overcome remaining barriers and fully realize the potential of renewable energy in Malaysia.

Valorization of cocoa pod side streams improves nutritional and sustainability aspects of chocolate

Chocolate production faces nutritional, environmental and socio-economic challenges present in the conventional cocoa value chain. Here we developed an approach that addresses these challenges by repurposing the often-discarded pectin-rich cocoa pod endocarp and converting it into a gel. This is done using cocoa pulp juice concentrate to replace traditional sugar from sugar beets. Although swelling of fibres, proteins and starches can limit gel incorporation, our proposed chocolate formulation contains up to 20 wt% gel. It also has comparable sweet taste as traditional chocolate while offering improved nutritional value with higher fibre and reduced saturated fatty acid content. A cradle-to-factory life cycle assessment shows that large-scale production of this chocolate could reduce land use and global warming potential compared with average European dark chocolate production. The process also provides opportunities for diversification of farmers’ income and technology transfer, offering potential socio-economic benefits for cocoa-producing regions.

Asymmetric connectedness and investment strategies between commodities and Islamic banks: Evidence from gulf cooperative council (GCC) markets

The study uses the data of thirteen Islamic Banks (IB) in the GCC region and sixteen commodities that include soft agriculture, energy, industry, and precious metal commodities. Murabaha transactions makes up most of the revenues of the Islamic banks, whereas commodities set up the biggest portion of the assets among Murabaha transactions, therefore commodities and IB revenues are expected to comove. Interestingly, empirical findings suggest that most of the Islamic banks and commodities are not significantly affected by the shocks from other markets. We further observe that negative shocks have a higher impact on market connectedness among used assets compared to the positive returns and find a significant role of risk variables in explaining the magnitude of spillover between used assets. We perform robustness of our results in sub-samples periods during Shale Oil Revolution, Global Financial Crisis, and the COVID-19. Additionally, the multivariate portfolio analysis shows some risk reduction properties of the majority of the used assets. The performance evaluation measures demonstrate that weights selected based on dynamic connectedness network presents diversification opportunities. These findings help investors and portfolio managers to remain alert to the movements of the risk factors and calibrate there hedging and portfolio management strategies by taking long and short positions as incorporation of Islamic banks and commodities in the GCC region in a portfolio could yield risk reduction benefits and profitability.

Evaluating the Efficiency of Alternative Investment Vehicles in Modern Portfolio

Abstract: The evolving global economic landscape has prompted investors to diversify their portfolios beyond traditional stocks and bonds, leading to the increasing prominence of alternative investments. This study examines the role and effectiveness of alternative investment options, such as private equity, hedge funds, real estate, and commodities, in modern investment portfolios. These non-traditional assets offer unique opportunities for risk management, diversification, and potential growth, making them appealing choices for investors seeking to enhance their portfolio's performance and stability. The research highlights the key factors driving the growing appeal of alternative investments, including their ability to provide diversification benefits by spreading risk across a range of assets with low correlation to traditional market indices. Additionally, these investments present opportunities for increased returns, particularly in low-interest rate environments, and enable investors to access emerging markets and industries, broadening their investment horizons

Quantile spillovers and connectedness between oil shocks and stock markets of the largest oil producers and consumers

This study explores the connectedness between major oil-producing and consuming countries' stock markets (United States, China, Russia, India) and different oil shocks categorized as demand, supply, and risk shocks, following Ready's (2018) framework. Employing a quantile-based connectedness approach and quantile cross-spectral dependence, our analysis spans from July 02, 2007 to May 31, 2023, encompassing diverse market conditions and events. These methodologies help identify interdependence patterns in extreme market scenarios at different time intervals. Key findings show variations in how these stock markets respond to oil shocks, depending on market conditions and quantiles. Demand-related shocks have the most significant spillover effects on the United States, Russia, and India, while risk-related shocks dominate as transmitters of shocks to the United States, China, and India in median quantiles. Market interconnectedness strengthens during extreme market conditions, reflecting historical events. Additionally, bearish markets offer diversification opportunities between these countries and crude oil. This study emphasizes the need for tailored investment strategies, monitoring global oil demand trends, dynamic portfolio management, crude oil inclusion in portfolios, and proactive responses to market players and geopolitical events. These insights benefit investors and policymakers seeking to optimize strategies in the interconnected global financial landscape.

Beyond N-Alkylation: Synthesis, Structure, and Function of N-Amino Peptides.

ConspectusThe growing list of physiologically important protein-protein interactions (PPIs) has amplified the need for compounds to target topologically complex biomolecular surfaces. In contrast to small molecules, peptide and protein mimics can exhibit three-dimensional shape complementarity across a large area and thus have the potential to significantly expand the "druggable" proteome. Strategies to stabilize canonical protein secondary structures without sacrificing side-chain content are particularly useful in the design of peptide-based chemical probes and therapeutics.Substitution of the backbone amide in peptides represents a subtle chemical modification with profound effects on conformation and stability. Studies focused on N-alkylation have already led to broad-ranging applications in peptidomimetic design. Inspired by nonribosomal peptide natural products harboring amide N-oxidations, we envisioned that main-chain hydrazide and hydroxamate bonds would impose distinct conformational preferences and offer unique opportunities for backbone diversification. This Account describes our exploration of peptide N-amination as a strategy for stabilizing canonical protein folds and for the structure-based design of soluble amyloid mimics.We developed a general synthetic protocol to access N-amino peptides (NAPs) on solid support. In an effort to stabilize β-strand conformation, we designed stitched peptidomimetics featuring covalent tethering of the backbone N-amino substituent to the preceding residue side chain. Using a combination of NMR, X-ray crystallography, and molecular dynamics simulations, we discovered that backbone N-amination alone could significantly stabilize β-hairpin conformation in multiple models of folding. Our studies revealed that the amide NH2 substituent in NAPs participates in cooperative noncovalent interactions that promote β-sheet secondary structure. In contrast to Cα-substituted α-hydrazino acids, we found that N-aminoglycine and its N'-alkylated derivatives instead stabilize polyproline II (PPII) conformation. The reactivity of hydrazides also allows for late-stage peptide macrocyclization, affording novel covalent surrogates of side-chain-backbone H-bonds.The pronounced β-sheet propensity of Cα-substituted α-hydrazino acids prompted us to target amyloidogenic proteins using NAP-based β-strand mimics. Backbone N-amination was found to render aggregation-prone lead sequences soluble and resistant to proteolysis. Inhibitors of Aβ and tau identified through N-amino scanning blocked protein aggregation and the formation of mature fibrils in vitro. We further identified NAP-based single-strand and cross-β tau mimics capable of inhibiting the prion-like cellular seeding activity of recombinant and patient-derived tau fibrils.Our studies establish backbone N-amination as a valuable addition to the peptido- and proteomimetic tool kit. α-Hydrazino acids show particular promise as minimalist β-strand mimics that retain side-chain information. Late-stage derivatization of hydrazides also provides facile entry into libraries of backbone-edited peptides. We anticipate that NAPs will thus find applications in the development of optimally constrained folds and modulators of PPIs.

Empowerment of SMEs And Entrepreneurial Ecosystems: a Qualitative Study on Diversifying Pattaya's Economy

Purpose: This qualitative study aims to explore how small and medium-sized enterprises (SMEs) and entrepreneurial ecosystems in Pattaya, Thailand, can empower the local economy to diversify beyond its traditional reliance on the tourism sector. It underscores the imperative of economic diversification for tourism-centric economies, especially in light of vulnerabilities exposed by global disruptions such as the COVID-19 pandemic. Method/Design/Approach: Employing a qualitative research design, the study utilizes in-depth interviews, focus groups, and participatory research methods with local entrepreneurs and stakeholders. This approach facilitates a comprehensive understanding of the experiences, strategies, and perceptions of those directly involved in Pattaya's SMEs and entrepreneurial ecosystems. Results and Conclusion: The research findings highlight a significant trend towards digital innovation and a reorientation towards local markets among Pattaya's SMEs. It uncovers the necessity for substantial investments in technology and digital infrastructure to enhance economic resilience and adaptability. Furthermore, the study accentuates the pivotal role of government in fostering an enabling environment through regulatory reforms, financial incentives, and infrastructure enhancements. The importance of educational initiatives in nurturing entrepreneurial skills and the critical involvement of the private sector and international organizations in supporting economic diversification efforts are also detailed. The conclusion posits that a collaborative, multi-stakeholder approach is vital for the sustainable economic development of Pattaya, moving beyond its traditional tourism-focused model. Originality/Value: This study contributes original insights into the challenges and opportunities for economic diversification in tourism-dependent economies, with a particular focus on Pattaya, Thailand. It offers valuable practical recommendations for SMEs, policymakers, and other stakeholders. Moreover, it underscores the importance of embracing digital transformation and fostering an entrepreneurial ecosystem as key strategies for achieving sustainable economic growth and resilience against global disruptions.

DYNAMICS OF ROMANIA-CHINA BILATERAL TRADE: A COMPREHENSIVE OVERVIEW

This study explores the evolving bilateral trade between Romania and China from the 20th century to the present, highlighting significant growth and strategic economic cooperation despite global challenges. Initially bound by political alliances and mutual reconstruction efforts post-World War II, the relationship deepened with Romania's shift to a market economy and China's opening-up policy. Analysing trade data from 1992 to 2021, the research reveals an increase in trade volume, especially after 2000, with China maintaining a trade surplus. Key traded goods include machinery, electronics, textiles, and natural resources. Despite challenges, such as geopolitical considerations, the trade relationship offers opportunities for further growth and diversification. The study underscores the potential for enhanced cooperation in sectors like energy, agriculture, and technology, pointing to a promising future for bilateral economic ties between Romania and China.

Time-varying causality among whisky, wine, and equity markets

Whisky has entered the category of alternative investment assets, with particularly attractive returns on certain bottles. The literature has shown the diversification benefits of investing in collectible assets, such as fine wine, but analyses dedicated to whisky investment remain scarce. Using different causality tests – parametric, non-parametric, and time-varying – applied to whisky, wine, and the MSCI World indices, we analyze the connection/disconnection between rare whisky, fine wine, and financial markets over a 13-Year period, from January 2010 to January 2023, in weekly frequency. Our results show that whisky and wine respectively provide attractive diversification opportunities when combined with stocks, except during “hectic” periods. Conversely, the combination of whisky and wine appears to be riskier in terms of portfolio diversification, especially since the COVID-19 pandemic.

Accessing Benzoazepine Derivatives via Photoinduced Radical Relay Formal [5 + 2] Reaction of Amide/Alkyne Enabled by Palladium Catalysis.

A novel class of alkyne-tethered amides facilitates an unprecedented photoinduced palladium-catalyzed radical relay formal [5 + 2] reaction. This innovative strategy allows for the rapid construction of diverse fused benzoazepine structures, yielding structurally novel and compelling compounds. With a broad substrate scope and excellent functional group tolerance, the methodology synthesizes biologically active compounds. Notably, the resulting tricyclic benzo[b]azepines offer diversification opportunities through simple transformations. DFT calculations elucidate a seven-membered ring closure mechanism involving the alkenyl radical and Pd(I) rebound alongside a concerted metalation-deprotonation (CMD) process.

Strategi Pengembangan Usaha Pelatihan Hidroponik Di Kota Bogor

Hydroponics is a method of cultivating plants without soil that is popular with Indonesian people. Its spread in Indonesia is supported by information openness via the internet and social media. Internet users reaching 77.2% have created a demand for hydroponic training. The urgency of training services is needed because hydroponic cultivation requires special skills. In the city of Bogor, there are business units that provide hydroponic training with limited face-to-face services which are very vulnerable to schedule limitations and social restriction policies by the government. The aim of this research is to formulate a strategy for developing a hydroponics training business in the city of Bogor. The approach uses qualitative methods with the Business Model Canvas framework to map digitalization adaptation and describe existing business models. Alternative strategies are formulated using SWOT analysis which combines internal strategic issues in the form of strengths and weaknesses with external strategic issues in the form of opportunities and threats. The formulated alternative strategy is implemented into the prototype canvas business model. Customer Response Index analysis is carried out to support SWOT analysis to obtain input based on responses from consumers. The research results found that digital adaptation was limited to business model marketing channels. Strength strategic issues lie in segmentation based on demand, service flexibility, and digital marketing adaptation. The weakness issue is dependence on one product and dependence on business partners. Strategic issues of opportunity are opportunities for product diversification, new partnerships, and conversion of training into digital products. The strategic threat issue is the opportunistic risk of business partners. The formulation of an alternative strategy recommends diversifying service products by adding services that are still in the hydroponics business line.

Time-varying risk spillovers between renewable energy and Islamic stock markets: Evidence from the Russia-Ukraine conflict

This paper examines the downside and upside risk spillovers between renewable energy and Islamic stock markets before and during the Russia-Ukraine crisis. We employ the VAR-ADCC model and conditional value at risk (CoVaR) techniques to estimate downside and upside risk spillovers. The results show that the risk spillovers are asymmetric for the majority of cases, but the degree of asymmetry varies across distributions and sub-samples before and during the Russia-Ukraine conflict. Specifically, the downside and upside risk spillover magnitude is not significant between renewable energy and Islamic stock markets of Malaysia, Turkey, and India during the Russia-Ukraine war compared to the pre-crisis period. These results imply that renewable energy markets are not sensitivitive to the Islamic stock markets of the three countries (Malaysia, Turkey, and India) during the Russia-Ukraine war. Our findings also imply that the Canadian Islamic stock markets provide diversification opportunities against renewable energy during the extreme downside risk spillovers. These findings provide interesting insights to portfolio managers and policymakers regarding important decisions like portfolio construction, hedging, and market stability.

Exploring the dynamic links, implications for hedging and investment strategies between Sukuk and commodity market volatility: Evidence from country level analysis

This research paper examines the influence of spillovers between volatility of commodities (including soft commodities, precious metals, industrial metals, along with energy) and returns of sukuk. Using a notable sample of fifteen sukuk country indices and sixteen products, we examine the time-varying criterion vector autoregression (TVP-VAR) based extended joint connectedness method and contribute to the correlation analysis literature by supplying a comprehensive as well as policy-oriented analysis of the connection between sukuks and also commodities. Our results disclose that the system-wide dynamic connectedness is slowly heterogeneous and driven by financial occasions. Next, we look at the potential determinants of connectivity between sukuk and commodity markets, we find that global risk factors significantly impact the degree of spillovers between markets. In particular, the negative impacts of risk factors on spillovers suggest that some risk-mitigating properties may be related to market leverage in the composite portfolio in bear market conditions. In addition, our results, using hedging efficiency and the Sharpe ratio, confirm the hypothesis of diversification opportunities between markets that leverage dynamic connectivity networks.

Connectedness between healthcare cryptocurrencies and major asset classes: Implications for hedging and investments strategies

This paper studies dynamic connectedness between four prominent healthcare cryptocurrencies, namely MediBloc, MediShares, Medicalchain, and Dentacoin, and bond, equity, and commodity markets along with USD and Bitcoin. The daily data span from February 2018 to April 2023. We applied the quantile VAR method and the wavelet quantile correlation approach to measure the connectedness. The quantile VAR method reveals a strengthening interrelation among the assets during COVID-19 and Russia-Ukraine military conflict, while the wavelet quantile correlation highlights the existing diversification opportunities. To test portfolio performance, we resort to minimum variance portfolio, minimum correlation portfolio and the recently developed minimum connectedness portfolio techniques. The minimum variance portfolio is best performing portfolio with highest Sharpe ratio. In addition, considering the minimum connectedness and minimum correlation portfolios, the exposure to healthcare cryptocurrencies also improves portfolio diversification. Based on the hedging effectiveness, we show that the investment in the healthcare cryptocurrencies reduces the volatility for all the selected portfolios though currently in a limited degree. However, the investors are advised to regularly monitor their asset allocation as, with the passage of time, the strength of hedging attributes may change. Our study provides important implications for policymakers and the portfolio managers.

Regional capability, evolutionary economic geography and global production networks

ABSTRACT In this exchange, I suggest that regional capability provides a lens to link two popular theories in regional studies, namely evolutionary economic geography (EEG) and global production networks (GPNs). This implies moving beyond ordinary to dynamic organisational capability that turns global value chain, geopolitical and security risks into opportunities for regional diversification.

6 Identifying research gaps and opportunities to enhance sustainable beef production

Abstract Sustainability has evolved and extended its influence across diverse sectors of the economy, including those in the beef supply chain. Public-facing companies predominantly emphasize environmental sustainability, especially climate-associated features, while beef producers continue to prioritize economic sustainability, hoping to to ensure their operation thrives into the next generation. Diversifying revenue and improving productivity are pivotal for safeguarding economic sustainability and fostering resilient production systems. Diversification is not new to beef producers; many have integrated ecosystem services into their operations to generate non-production revenue. The most valuable asset of a beef producer is the productivity of the land. Decision support tools need to be enhanced to allow producers to either capitalize on above average forage production to generate additional income, or to plan for alternative strategies when forage supply is forecast to be reduced. Because downstream beef supply chain participants prioritize environmental sustainability or reduction of scope 3 emissions, an emerging diversification opportunity for beef producers is to address this opportunity. While soil carbon initiatives have received attention, companies with substantial scope 3 emissions from beef production may value greenhouse gas (GHG) emissions from cattle more highly. Incentives for practices that reduce GHG emission from cattle can simultaneously reduce environmental impact associated with beef production and generate an additional revenue stream adjacent to beef production. Current opportunities to participate in these incentive programs are limited. Research can address the creation of functional protocols, and their intrinsic value. Clear targets, for gross emissions or emissions intensity, must be set but are not equivalent. In particular, research on effective/acceptable monitoring, reporting, and verification of emissions claims is imperative to functional markets. Innovation in emissions management and productivity gains can be integrated, so that goals of economic and environmental sustainability among value chain participants can be achieved. Maintaining a comprehensive perspective on sustainability solutions is essential to meeting the needs of humanity.

Hedging rainfall risk: An illustrative analysis of rainfall index-based futures contracts

Various studies have attempted to explore rainfall index (RI)-based derivatives as a tool to hedge rainfall risk. But no study delved into the issue to discuss the potential deployment of those tools for hedging rainfall risk on a model based on RI-based futures (RIBFs). An illustrative analysis of RIBFs contracts as hedging instruments has been undertaken in this study. The study is fundamentally based on empirical data. A brief account of the rainfall risk profile is presented to indicate the risk diversification opportunity. Besides, the results of an analysis of the correlation between the RI and the stock market index are projected to establish the RI as a unique asset class. The monsoon rainfall data for 50 years, i.e., from 1971 to 2020 have been considered. The Sensex and Nifty stock market indices data covered a period of 30 years, from 1991 to 2020. The study used correlation, the GARCH (1,1) model, and ratio analysis to test the hypotheses. A hypothetical insurance company representing major stakeholders in need of rainfall risk hedging has been taken as an example for evaluating the utility of RIBFs contracts as hedging tools. The results reveal that the party buying RIBFs contracts can significantly reduce the loss of revenue due to adverse monsoon outcomes.