The Complexity And Correlation Analysis Of Carbon Market Based On Multiscale Entropy

Carbon trading is an effective market tool used to reduce global carbon dioxide emissions.The complexity of the carbon market directly affects the performance of its emission reduction function.As a responsible country,China started to establish seven pilot carbon markets in 2011.Studying the complexity and relevance of these pilot carbon markets will help China better explore the market path for low-carbon development.This paper takes carbon price as the research object,uses entropy to measure the complexity of the carbon market,and studies the complexity and correlation of China's pilot carbon market from different time scales.The details are as follows:Firstly,this article studies the complexity of China's pilot carbon market.We use moving average to replace the coarse-grained process to solve the problem of short data set length;multi-scale entropy is used to analyze the complexity of the seven pilot carbon markets from the perspective of different investors.The study found that the entropy values of all pilot markets are at a very low level in terms of overall or multiangle perspectives,and the carbon market has a low level of complexity.It is inferred that China's pilot carbon market is not yet mature in terms of market efficiency.However,the complexity varies on different time scales,and the carbon market except for the Chongqing pilot is more complicated in the short term than in the long term.In addition,the complexity of most pilot markets increases with the development of the market,indicating that market efficiency has improved.Secondly,this paper studies the interdependence of China's pilot carbon market based on complexity.We use multi-scale fuzzy entropy to measure the complexity of the pilot market,and use the correlation of the entropy sequence to describe the dynamic behavior of the pilot market.The role of the pilot market is studied through the change of norm and eigenvalue of the entropy correlation matrix.The results found that the advantages of the pilot market are positively correlated with the central correlation;The correlation is strong on a time scale of less than one week(absolute value > 0.5),Weak on a time scale greater than one month(absolute value < 0.5);The Beijing pilot market as a whole showed the greatest distance correlation and the largest change in eigenvalues.Therefore,it is considered to be the most relevant one in China's regional carbon market to other pilots.The results of this paper indicate that China's carbon market is relatively low in complexity and cannot yet realize the cost-effective function of carbon emissions trading.The construction of a national carbon market should pay more attention to the Beijing market.