Hedging is to offset each other's risks through portfolio allocation. For example, in the future, when the Shanghai and Shenzhen 300 index futures come out and some funds hold the Shanghai and Shenzhen 300 stocks, they can hedge the downside risk of the Shanghai and Shenzhen 300 stocks by selling the 300 index futures. A simple example of leverage is warrants. For example, if you think that Jiangtong will go up, but its share price is more expensive and its warrant price is cheaper, then your warrant for investing in Jiangtong is equivalent to investing in Jiangtong's stock, and the amount of funds used is small. This way is called leverage. Hedge funds are leveraged for the same reason. For example, if the fund thinks that the market will rise, then the Shanghai and Shenzhen 300 Index will rise, but the amount of funds needed to buy the stocks of the Shanghai and Shenzhen 300 Index is very large. The capital demand for buying the futures of the Shanghai and Shenzhen 300 Index is much less than that for buying all the stocks of the Shanghai and Shenzhen 300 Index, but the same investment effect can be achieved. This is called leverage of hedge funds.