New Delhi, April 15 -- While profitability is the primary focus for both investors and businesses, risk management is an equally important factor. Hence, in this dynamic financial world, hedging gains prominence.

Here's all you need to know about hedging.

Hedging is a strategy used by investors and businesses to safeguard against potential losses of one investment by expecting gains in another. It protects against frequent fluctuations in the price of stocks, bonds, and other securities. Through hedging, investors can minimise risks without selling current holdings. Notably, hedging does not avoid losses, but it helps minimise the impact of such losses.

For instance, an investor may maintain a portfolio through balanced allocation in e...