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Hedging

Hedging is a risk management strategy used in financial markets to protect against potential losses. It involves making an investment designed to reduce the risk of adverse price movements in an asset, such as a commodity, stock, or foreign currency. An investor who has a portfolio of stocks may use financial instruments like futures or options to hedge against a fall in stock prices. The idea is not to make a profit from the hedge itself, but to offset any losses from the main portfolio with gains from the hedge.

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