The relationship between stock returns and weather variables in Ho Chi Minh City
Abstract
The study investigates the relationship between stock returns and three
weather variables, which are temperature, humidity and wind speed in Hochiminh city
from 2012 to 2014. The model also includes three dummy variables which present for
rainy days, cloudy days and sunny days. The study uses multiple regression tests to
examine this relationship. In general, on the whole sample, temperature show its negative
relationship with stock returns while humidity only shows its weak negative correlation
with stock returns. On the subset of sunny days, both temperature and humidity are
negatively correlated with stock returns. Wind speed in Hochiminh city, by contrast, does
not have any influence on the return of VN-index. This study implies that the changes of
temperature should be taken into consideration of investors whereas, on sunny days,
traders should also consider the fluctuations of humidity.