Zoho Bookings & SalesIQ Alignment

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Hedge

Meaning: 

A Hedge is defined as a financial strategy employed to protect against potential losses in investments. It serves as a form of insurance for your investment portfolio. In
essence, hedging is a method of reducing risk.

Example:

For example, if you invest ₹1,00,000 in stocks but fear a market downturn, you can  buy options or futures contracts to limit your losses. This strategy is referred to as hedging.

How to understand Hedging :

Hedging is important for stabilizing a portfolio by balancing exposure to various risks.
It is useful during uncertain events such as elections, wars, or global crises.

Uses of Hedging: 

Investors hedge stocks, bonds, or commodities to minimize downside risk, while companies hedge against currency, interest rate, and commodity price risks.


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