Spot and Derivative Contract Prices: Articulation of Relationships of Cardamom through ARDL Method
Sachin Kumar1, Yash Pal Taneja2, Nishi Bala3
1Sachin Kumar, Ph.D. Candidate, Language Technologies Institute Carnegie Mellon University, Pittsburgh Pennsylvania.
2Yash Pal Taneja, Assistant Professor, Accounts and Finance, Goswami Ganesh Dutta S.D College, (Chandigarh), India.
3Nishi Bala, Programme Officer, ICCR Indian Council For Cultural Relations.
Manuscript received on 15 November 2019 | Revised Manuscript received on 04 December 2019 | Manuscript Published on 10 December 2019 | PP: 73-77 | Volume-8 Issue-3S2 October 2019 | Retrieval Number: C10121083S219/2019©BEIESP | DOI: 10.35940/ijrte.C1012.1083S219
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: India is known as land of spices and boast of a long history in spices trading. Cardamom derivative contract is listed for trading on Multi commodity Exchange in India. This paper endeavors to find out relationship between spot and derivative contract of cardamom. The relationship is also tested between derivative price of cardamom and spot price. Two period derivative contracts, near month contract and next contract of cardamom are used for the study. Long run relationship is examined through ARDL Bounds test. ECM is applied to find out short term relationship and speed of adjustment towards long run. Long run relationship was found between spot and derivative as well as between derivative and spot. Long run relationship was established in both period contracts. Short run relationship was also established and speed of adjustment is higher in near month contract.
Keywords: Derivative Contract, Spot Contract, ARDL, ECM, Cointegration.
Scope of the Article: Social Sciences