New Delhi, Nov. 6 -- In the uncertain world of investing, hedging provides investors with a proactive shield, i.e., a defence against downside risks. On a fundamental level, hedging means taking a position that offsets potential losses in your main investment.

As an investor, you can look at hedging as insurance for your portfolio. It is essentially an investment made with the intention of mitigating the overall risk of adverse price movements in an asset.

To put it simply, hedging is a concept that involves using financial instruments or strategies such as derivatives, options, futures, or asset diversification across instruments such as stocks, bonds, and mutual funds, to reduce or offset potential losses in a portfolio.

For Indian r...