Markovitz portfolio

Basket payment combined with markowitz portfolio applied to commodity trade

The article presents a method for expressing the value of commodities on world markets (petroleum products) as a function of a basket of currencies or a basket of precious metals (Gold and Silver) and compares their performance with a Markowitz portfolio of the underlying. The method of basket payments can be used as a tool for diminishing the riskiness of forward transactions on commodities markets. By establishing a model of payment based on the baskets, we propose to liberate the payment rules from disadvantages inherent in the use of official currencies.