The stock market is a financial market with considerable risks, and stock investors face two kinds of risks.
The first category is the risk brought by the market price fluctuation of specific stocks affected by specific factors, which is called unsystematic risk;
The other is the market price risk brought by the rise and fall of all stocks in the market under the influence of factors acting on the whole market, which is called system risk. For non-systematic risks, investors can eliminate them by increasing the number of shares held and building a portfolio; For the latter risk, it is difficult for investors to avoid it only by buying one or more stock futures contracts, because the combination of one or more stocks cannot represent the trend of the whole market, and it is impossible for one person to buy and sell all stock futures contracts. In the long-term stock practice, it is found that the stock price index basically represents the trend and range of stock price changes in the whole market. If the stock price index is converted into a tradable commodity, the futures contract of this commodity can be used to protect the whole market. The fundamental reason for using stock index to preserve value lies in the positive correlation between stock index and the whole stock market price.