Study of the necessity for the temperature risk hedge in area and firm

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The corporate earnings are influenced of abnormal weather. In order to bring stable earnings, it is necessary to avoid the weather risk. Although the weather derivatives which considered most effective to avoid the risk are introduced into Japan in 1999 and the market is expanded gradually, it cannot be said that transaction volume is briskly. This study investigated the relationship between abnormal weather and the enterprise, and was understood that there are more enterprises influenced of abnormal weather in summer. Moreover, from analysis of the compensation and price of weather derivatives, it turned out that it is necessary to design the weather derivatives for each area in winter rather than summer.