Prediction of oil and aluminum prices using stochastic differential equations

Abstract

In the globalized today’s world, uncertainty shows up in the modern’s economies performance. This condition influences directly on these economies, because of that, the propensity to suffer the market’s different variables’ fluctuations’ consequences is an unquestionable fact. The commercial and financial opening that distinguish the modern economies on a global context has encouraged the appearance of uncertain sceneries where the risk plays a starring role. This situation requires de implementation of programs to administrate risk with financial conflict’s impact reduction views that attempt against the different economic authors’ stability.

Generally, small and open economies present specific characteristics that makes them very vulnerable against economic financials unbalances, amongst them, price variation. That is why; to manage the exposure to prices volatility generates a growing need for financial protection.

Cuba enters in this type of economy highly exposed to the given variations in the international scenery. This vulnerability goes deeper with the existence of the economic and financial embargo imposed by the United States. Due to this situation, it is highly beneficious to the island to count with tools to reduce to the minimum risk, and optimize the making decisions’s process on the external commerce’s related questions.