Claims:We Claim:
1. The computer-based algorithm or method is mainly used to predict the price of natural gas in near future comprising with the step of:
a. an input of temperature past database for particular time period with the help of Graphical user interface;
b. an input of temperature future database for particular time period with the help of Graphical user interface;
c. an input regarding gas database for particular time period with the help of Graphical user interface;
d. applying, at a server, a series of analyses to obtain a predicted baseline values for natural gas for said time using received past temperature information, received future temperature information, received gas price information;
e. receiving, from a data feed, live exchange data which indicates a current price of natural gas for said period of time;
f. applying to said server, by using correlation coefficient to temperature and price of natural gas the price of natural gas in near future is predicted.
2. The system claimed in claim 1, wherein the system can (a) use data of temperature for various cities and price of natural gas for particular temperature;
(b) calculate correlation coefficient of price of natural gas in future with reference to temperature and price of natural gas at that temperature.
3. The system claimed in claim 1 wherein, the temperature data can be utilised by multiple agencies to make efficient prediction and the mean value of temperature can be used for prediction of price of natural gas in near future by using correlation coefficient algorithm.
4. The system as claimed in claim 1 wherein, the price of natural gas in near future is more than the price of natural gas in current days, algorithm will suggest buying of natural gas in future.
5. The system as claimed in claim 1 wherein, the price of natural gas in near future is less than the price of natural gas in current days, algorithm will suggest selling of natural gas in future.
, Description:TECHNICAL FIELD OF THE INVENTION
This invention is related to algorithm and computer program which predicts prices of natural gas in near future using correlation coefficient of prices of natural gas and temperatures of cities to help in trading of natural gas.
BACKGROUND OF THE INVENTION
In today's financial markets, the use of financial instruments known as futures contracts are common place. Futures contracts are standardized, transferable agreements, which may be exchange-traded, to buy or sell a commodity.
Natural gas is also one of the commodity for trading. These contracts typically involve an agreed-upon place and time in the future between two parties. That is, a futures contract is supply contract between a buyer and seller, where the buyer is obligated to take delivery, and the seller is obligated to provide delivery of a fixed amount of a commodity at a predetermined price at a specified location. Futures contracts are typically traded exclusively on regulated exchanges and are settled daily based on their current value in the marketplace.

Another form of financial instruments are option contracts. Options contracts are agreements, that may be exchange-traded, among two parties that represent the right to buy or sell a specified amount of an underlying security such as a stock, bond, natural gas at a specified price within a specified time.
Because futures and option contracts are essentially financial instruments, they may be traded among investors as are stocks, bonds, and the like.
In order to trade gas futures and options, there must be a mechanism to price them so that traders may exchange them in an open market. A temperature, and more specifically future temperature, has not been included as a formal variable in pricing models.
The few models that have considered weather usually have only considered past temperature data. Further, strategies based on predicated demand also have only considered past temperature data. That is, most models and strategies assume, for example, that the previous year's temperature and its effects on power demand will repeat from year to year. Past analysis has shown, however, that this assumption is true only a quarter of the time. Thus, regardless of whether futures or options are being evaluated, risk management trading techniques, strategies, or vehicles, traders essentially have been operating in the “blind” without knowledge of future temperature conditions. And it is difficult to know the price of natural gas in near future. So, decision of buying or selling of natural gas in future get difficult.
Therefore, what is needed is a method, system and computer program product for valuating and thus, processing and trading natural gas futures and options contracts using temperature.
Now, here come the presented algorithm and computer program which helps to predict the prices of natural gas in near future with reference to current prices of natural gas and temperature which also helps in decision making of trading of the natural gas in near future.
OBJECTS OF THE INVENTION
The main object of this invention is the method and computer program used to predicts the price of natural gas in near future by using correlation coefficient of price of natural gas and temperature.
Another object of this invention is that for prediction of natural gas prices, data of temperature of cities and price of natural gas for particular cities are fed to the algorithm as input.
Another object of this invention is that the data fed to algorithm have live exchange with database and it will predict the prices of natural gas in near future.
The other object of this invention is that temperature data can be taken from multiple agencies. And then mean of temperature is calculated. And that resulted temperature is fed to algorithm as input.
SUMMARY OF THE INVENTION
The method, system and computer program for valuating natural gas futures by using correlation coefficient with temperature and price of natural gas is disclosed.
The method and computer program comprising of; an input from a user interface such as number of months for gas contracts, past and future temperature values, natural gas values for particular temperature for particular location.
Then, by processing with algorithm it gives output as price of natural gas for that future particular time period. And also give suggestion for buying/selling natural gas in future.
For this method and computer program it can take temperature data from multiple agencies. And then it will take the mean of temperature which will give the efficient output here it is the price of natural gas in near future.
BRIEF DESCRIPTIONS OF DRAWINGS
Fig 1 shows flowchart of the method and computer program for this invention.
DETAILED DESCRIPTION OF THE INVENTION
The presented algorithm and computer program predict the price of natural gas in near future for the purpose of trading by using correlation coefficient of temperature and natural gas.
In embodiment of, a method and computer program for prediction of price of natural gas in near future comprising of;
A computer system for storing that input and output data in databases.
A method or algorithm for proceeding the process of prediction of price of natural gas.
The method or algorithm head with price data of natural gas on various days. The data of temperature of cities and price of natural gas for that particular temperature and for that particular cities are provided for last 10 years.
The method or algorithm draw a correlation coefficient of the prices of natural gas and mean temperature of various cities.
The algorithm comprising of databases;
Temperature past database, Temperature future database, Time periods, Gas database
And it has relationship between databases such as relationship between past and future temperature database,
The databases comprising of;
Temperature past database - This database contains values of temperature in past. Having record for ideal temperature, actual temperature and difference between ideal temperature and actual temperature for particular city on particular time period.
Temperature future database – This database contains values of temperature in future. Having record for ideal temperature, actual temperature and difference between ideal temperature and actual temperature for particular city on particular time period just same as temperature past database.
Time periods – Preferably time increment is the same in both databases mentioned in above. In practice system administrator will select the same time increment for both databases during setup process to synchronize both databases.
Gas database – This database contains records of natural gas price for monthly basis. And should contain high, low and closing price for particular month for past temperature.
Relationship between past and future database - The above-mentioned temperature past database contains past information. In contrast, the temperature future database contains information pertaining to predicted temperature in the future.
Both databases contain information on a per period basis. Preferably, the increment of time represented by a period is the same in both databases. Also, the periods in both databases are synchronized.
Graphical user interface is used for input and output to the method and program. Graphical user interface includes screen which will take input from user and will give output to user. Here the input would be mean temperature for particular city for particular time period and price of natural gas for that particular temperature. With the help of correlation coefficient of temperature and price of natural gas the algorithm will predict the price of natural gas in near future.
If predicted price of natural gas in the coming days is high than the current price of natural gas then algorithm will suggest buying or signal buying of natural gas.
On the contrary if the predicted price of natural gas is less than the current price of natural gas, it will suggest to sell the natural gas in future.
To get better efficiency production of temperature of various cities algorithm will utilise temperature prediction from multiple agencies. And mean temperature will be calculated from all data of temperature from multiple agencies.
Mean temperature gives the efficient price of natural gas in near future.
The present invention may be implemented using hardware, software or a combination of both. And it may be implemented in one or more computer systems or other processing systems.