| There are more and more Chinese companies participating in the international shipping market in recent years. Dry bulk shipping industry is a complete competition market, and the freight rate of which could change more than 20% within a week. The huge fluctuation brings extreme risks for both shipping companies and shippers. Besides, the value of shipped material, as iron ore, coal and agriculture products, is not so high, which make freight more important. As a sequence, the freight brought lots of risks and uncertainty to dry bulk ship owners, and using shipping financial derivatives to control market risk is urgent for shipping companies.As the development of financial investment theory & econometrics, financial risk management have various methods. This article firstly introduces the basic financial risk management, and then describes the characteristic, principles and calculation method of VaR (Value at Risk), which is the most usually used financial risk control theory currently. And this article then applied VaR theory for fluctuation& risks in shipping. Finally this article took a realistic calculation using VaR to analyze the BDI during the stable period and fluctuated period between years 2005 to 2009, totally 1,123 working days with the historical simulation method as to analyze the risk situation of the shipping market. Through the result based on the realistic status, it turned out that the historical simulation method and the improved historical simulation method can simulate the shipping market properly. Because of the huge fluctuation of shipping market and natural limitation of VaR method and historical simulation method, it is suggested the shipping companies should be more cautious to make investment decisions. |
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