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A New England Patriots fan, for example, could bet their opponents to win to reduce the negative emotions felt if the team loses a game. So there is a risk of a future event that affects stock prices across the whole industry, including the stock of Company A along with all other companies. But Company A is part of a highly volatile widget industry. He wants to buy Company A shares to profit from their expected price increase, as he believes that shares are currently underpriced.
In simple language, a hedge is used to reduce any substantial losses or gains suffered by an individual or an organization.
