Hedging with Different Financial Risks by Constructing Investment Portfolios

Jiansheng Li ()
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Jiansheng Li: Changchun New Oriental School

A chapter in Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024), 2025, pp 452-461 from Springer

Abstract: Abstract Risks play an important role in investor’s decisions. So far, scholars have developed many strategies that can mitigate financial risks in theory, but for risks in real life, their changes are influenced by many complex factors. Therefore, constructing a valid investment portfolio in real life is still challenging. This article will construct various investment portfolios to hedge different financial risks. The research methods used in this paper are as follows. First, find some real investment opportunities and figure out their risks. Then, collect real-life data about different financial products that can be used to construct portfolios. Finally, identify portfolios that can mitigate risks. It was found that interest rate futures contracts, gold, and investments in different national markets can effectively mitigate interest rates, purchasing power, and exchange risks, respectively. The actual cases prove that individual investors can mitigate the financial risks of investment by constructing investment portfolios. The study found that investors can choose to invest in socially and economically stable areas, which can avoid many risks without the need to hedge their portfolios.

Keywords: Hedging Risk; Investment Portfolio; Data Analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-652-9_48

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DOI: 10.2991/978-94-6463-652-9_48

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