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. 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.
Hedging is the most common in the foreign exchange market, focusing on avoiding the risk of one-way trading.
Extended data:
Hedging transaction between futures and spot, that is, trading in the futures market and spot market with the same number and opposite directions at the same time, is the most basic form of futures hedging transaction, which is obviously different from other hedging transactions.
First of all, this hedging transaction is not only conducted in the futures market, but also in the spot market, while other hedging transactions are futures transactions.
Secondly, this kind of hedging transaction is mainly to avoid the risks brought by price changes in the spot market and give up the possible benefits brought by price changes, which is generally called hedging. The purpose of several other hedging transactions is to carry out speculative arbitrage from price changes, which is usually called profit hedging.
Baidu encyclopedia-hedging
Baidu encyclopedia-hedging transaction