Hedging is a strategy often poorly understood and even more poorly executed. Its purpose is simply to reduce the risk inherent in certain financial activities. Simply put, hedging involves taking a second position opposite to one’s primary position in a market to minimize the effect of adverse price movements.
Hedging is an effective way of protecting the value of an investment and minimizing its downside
Done correctly, hedging is an effective way of protecting the value of an investment and minimizing its downside. While not exactly an insurance policy, done correctly it should produce the same result: a decrease in risk, with a corresponding uptick in the investor’s ability to sleep well at night.
Unfortunately, in many parts of the world, hedging is scarcely known and, worse, implemented with ineffective instruments, leading to wasteful spending and high operating costs.
CS&P develops and executes a range of market-tested, effective and efficient hedging strategies that help our clients manage risk. By eliminating or reducing uncertainty, these strategies give clients the freedom to stay focused on their core business and investment objectives and thus maximize returns.