It is a perfect hedge. Many participants in the futures market are hedgers. Their purpose is to use the futures market to hedge certain risks they face. The risks here may be related to crude oil prices, exchange rates, and stocks. related to fluctuations in prices or other variables. A perfect hedge is a strategy that completely eliminates risk. In practice, a perfect hedge is extremely rare. Therefore, in most cases, choosing futures hedging means finding a hedging method that is as close to perfect as possible.

If the minimum variance hedging ratio is 1.0, then the hedge must be a perfect hedge.