The asymmetric effect of temperature, exchange rate, metals, and investor sentiments on solar stock price performance in China: evidence from QARDL approach

Abstract

The study investigates the asymmetric effect of temperature, exchange rate, metals (rare metals and electrical conductors), and investor sentiments on solar stock price performance in China. The novel econometric techniques, i.e., QARDL (quantile autoregressive distributive lag) approach and Granger causality-in-quantiles to analyze the results. In both short-and long-run estimations, the findings suggest that rare metals (cadmium, germanium, indium, and selenium) and electrical conductors (silver, aluminum, and copper) have significant and positive linkage with solar energy stocks at different quantiles based on bullish, bearish, and normal market conditions. On the other hand, negative effects are found for temperature, RMB exchange rate, and investor sentiments in both the short-and long-run. In the short run, the effect of exchange rate varies across different quantiles but it confines to only lower quantiles (bearish market condition) in the longer run. Solar stocks are more prone to investor sentiments under higher quantiles (bullish market conditions). Lastly, we find that temperature is not merely a behavioral anomaly for the solar energy market as it spreads across middle quantiles (normal market conditions) in the longer run. The findings of Granger causality in quantiles further confirm the results of QARDL.