Predicting volatility in China's clean energy sector: Advantages of the carbon transition risk

Wang Chen, Zhu Chen and Qin Luo

Finance Research Letters, 2025, vol. 72, issue C

Abstract: This paper develops a market-level carbon transition risk concern index and examines its ability to predict the volatility of China's clean energy market along with eight economic policy uncertainty indices. The results suggest that the carbon transition risk concern and global economic policy uncertainty index significantly predict the volatility of China's clean energy market. Carbon transition risk concern is the primary driver of market volatility; its extended model demonstrates increased predictive accuracy. Robustness tests confirm the reliability of the findings.

Keywords: Clean energy; Carbon transition risk; Volatility forecasting; Chinese financial market (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015630

DOI: 10.1016/j.frl.2024.106534

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