Modeling Stock Price Distributions and Estimation of Asset Volatility for Nuclear Power Plants

Abstract

The aim of the study is to determine the possibility of using the volatility of prices quoted on the stock exchanges of entities from the nuclear sector to apply and model NPV distributions in nuclear power plant projects. It presents modeling of the price distributions of shares of three companies and three ETFs operating in US, UK and China from the nuclear sector in the period 2023–2025. For this purpose, the Back-Test approach was used and Monte Carlo simulation was applied using the geometric Brownian motion model. The modelled distributions for April 2025 were compared with the prices quoted on the stock exchange for the studied companies and ETFs also in April 2025, which was to determine the quality of the model. Good accuracy of stock price modeling was obtained for the CNNC company from China, two ETFs from the US and one ETF from the UK. The modeled prices for these entities were very close to the actual prices on the market. This conclusion allowed us to state that the stock prices on the stock exchange of these entities replicate the behaviour of the volatility of nuclear power plant assets. Therefore, the variability of these entities can be used to model NPV distributions in the implementation of nuclear projects.