Portfolio Hedging is the practice of taking offsetting positions in derivatives or negatively correlated assets to reduce the overall risk exposure of an investment portfolio without fully liquidating existing holdings. Common hedging tools used by Indian investors include buying Nifty or individual stock put options to protect against a market fall, selling index futures to reduce net equity exposure, increasing allocation to gold or short-duration bonds, or using inverse ETFs. The cost of hedging (the option premium, or foregone returns from defensive positioning) is the price paid for insurance. Effective portfolio hedging does not aim to eliminate all risk that would eliminate all return but to reduce tail risk and cushion losses during sharp, unexpected market downturns.
For android only
