In finance, hedging refers to an investment that deliberately reduces the risk of another investment. General hedging is to conduct two transactions at the same time, both related to the market, in the opposite direction, with the same amount and breakeven.
1, market correlation refers to the identity of market supply and demand that affects the prices of two commodities. If the relationship between supply and demand changes, it will affect the prices of two commodities at the same time, and the prices will change in the same direction.
2. The opposite direction means that the buying and selling directions of two transactions are opposite, so that no matter which direction the price changes, there is always a profit and a loss.
3. Break-even means that the number of two transactions must be determined according to the range of their respective price changes, and the number is roughly equal.