Research On The Influence Of Hedging On Profit Volatility In Tongling Nonferrous

With the continuous improvement of China’s financial market,it is more and more common for enterprises to avoid market risks through financial derivatives.Especially under the international situation of the trade war between China and the United States,commodity prices and exchange rate fluctuations become more and more serious.Hedging has become a popular way for enterprises to reduce market risks.Especially for non-ferrous enterprises with international trade business and under the dual influence of macro economy and supply and demand in the upstream and downstream of the industrial chain,price fluctuations and exchange rate fluctuations have a more serious impact on the profits of enterprises.In theory,hedging has the function of locking price,exchange rate and interest rate and reducing profit volatility,so it becomes the primary strategy to deal with market risks.However,hedging itself has the nature of leverage and hides huge risks.Once it is used or supervised improperly,it will lead to huge losses.Therefore,it is worth studying whether the hedging business reduces the profit volatility and which hedging strategy is more reasonable.Based on the actual application effect,this paper takes tongling nonferrous metals as the research object to study whether the hedging reduces the profit volatility in the actual application,whether the increase of the by-product of the hedged item and the increase of the foreign exchange forward hedging of the hedging instrument reduces the profit volatility.The comparative research method is adopted to compare and analyze the effect of hedging on tongling nonferrous metals from three aspects: the overall situation,the variety of products and the number of derivative instruments.It is concluded that hedging can effectively reduce the fluctuation of profits of tongling nonferrous metals on the whole,that increasing the hedging of by-products can increase the fluctuation of profits,and that increasing the types of derivative instruments can reduce the fluctuation of profits.According to the research conclusion,the case company insist is given through hedging hedge market risk,reduce the by-products of a hedged item in hedging business,use a variety of derivatives hedging optimization strategy advice,to the other to carry out hedging business enterprise gives targeted for hedging,strengthen internal risk supervision and management advice,for regulators to strengthen the supervision of hedging market is given and Suggestions to strengthen the construction of talent team of hedging.