LONG MEMORY IN CURRENCY FUTURES VOLATILITY

Ching Fan Chung, Mao Wei Hung, Yu Hong Liu

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Citation (Scopus)

Abstract

This study employs a new time series representation of persistence in conditional mean and variance to test for the existence of the long memory property in the currency futures market. Empirical results indicate that there exists a fractional exponent in the differencing process for foreign currency futures prices. The series of returns for these currencies displays long-term positive dependence. A hedging strategy for long memory in volatility is also discussed in this article to help the investors hedge for the exchange rate risk by using currency futures.

Original languageEnglish
Title of host publicationResearch in Finance
Pages139-158
Number of pages20
DOIs
Publication statusPublished - 2003 Dec 1

Publication series

NameResearch in Finance
Volume20
ISSN (Print)0196-3821

All Science Journal Classification (ASJC) codes

  • Finance

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