A Financial Hedge for Liquid Asphalt

Yep, you read that right.

I have created a proprietary algorithm based on petroleum coker outputs that use financial surrogates to create a synthetic asphalt hedge and it’s amazingly affordable.

I back-tested the model against 326 weeks of published coker alternative asphalt values and ran a regression analysis (r2) to see how well the two data sets correlate to each other. I was actually surprised to see the value come out to 0.983 (meaning the model correlates to actual data 98.3% of the time) and that the model calculated values were above the coker values in every instance(See graph).

In other words, the model never predicted a value below the published value. To me, this adds a degree of confidence when either producing a financial outcome or predicting a future price, whether up or down. I think in the near future, coker values will provide the floor for wholesale asphalt pricing.

I also use this algorithm to predict future asphalt prices for bidding or other purposes. If you would like to know more about how this methodology can help you manage risk, contact me right away, number is up top, or use contact form below.