MARKET: General
The Hang Seng Index (abbreviated: HSI) is a freefloat-adjusted market capitalisation-weighted stock market index in Hong Kong. It is used to record and monitor daily changes of the largest companies (45) of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong. These 45 companies represent approximately 67% of capitalisation of the Hong Kong Stock Exchange.
Hedge
MARKET: General
In finance, a hedge is a contract/transaction that is taken out (bought/sold) specifically to reduce or cancel the risk of loss from a given exposure to movements in prices, exchange rates, interest rates or commodity prices.
Hedge Fund
MARKET: General
A loosely regulated private investment fund. The term is not a specific legal term but is used to differentiate lightly regulated funds which are (because of their lighter regulation) generally only open to a limited number of investors each of whom must invest large amounts. Hedge funds largely make use of derivative transactions to create exposures and profit from market movements.
Hedge Ratio
MARKET: General
The amount of the hedge product (derivatives) that is required to cover the potential amount of loss on the hedge position due to unfavourable movements in market prices/rates.
Hedging
MARKET: General
The process whereby a market participant buys or sells a financial instrument, usually a derivative contract, in order to offset the risk of loss on an existing financial exposure. E.g. an importer who enters into a forward exchange contract to fix the exchange rate for the import cost uses the derivative contract to hedge the exposure to the weakening of the domestic currency.
Historical Volatility
MARKET: Options
Volatility refers to the variability of the market price (value) of a financial instrument, or the variable of the exchange rate or commodity price; historical volatility refers to the volatility based on past price behavior.
Hybrid Security
MARKET: Derivatives
A security whose return or price behavior depends on a combination of risk types or which has been constructed from several different instruments to produce returns which mimic those of another instrument. An example is a convertible bond as it has characteristics of a normal fixed income security, but its value is also affected by the issuing company’s share price.
