What is a hedge fund?

A fund that invests by placing conflicting bets,
sacrificing a small portion of the overall benefit, and
washing away most of the unwanted risk . Such as playing a roll point game. Bet 1-49, if you win, you bet 1, and you will pay 3. Bet 50-99, if you win, you bet 1 piece and pay 3 pieces. Bet 100, if you win, you bet 1, and you will pay 3. For every block bet, the casino taps 1 cent. A bet 1-49, 10 yuan. B-jun bets 1-49, 10 yuan, 50-99, 10 yuan c-jun all bets, each 10 yuan at this time, no matter how many points are rolled, c is flat. But lost a tap. a Jun is only earned when it is 1-49. Mr. b earns all the time from 1-99, and earns a little less. b This is playing hedging. The ability to find games with such odds in real life is the core competitiveness of hedge funds. Another example: in a relatively transparent and open market, the value of the same commodity should be relatively stable. For example, for example, an item A sells for 10 yuan in store X and 12 yuan in store Y. If the information is gradually transparent, ideally, X and Y will be close to 11 yuan. But before reaching the equilibrium value of 11 yuan, you buy long in store X and sell short in store Y, and when you reach the equilibrium value of 11 yuan, you will make a lot of money. The above example is spatial, and the time dimension will also be used. For example, the interest rate of one US Treasury bond is M, and the interest rate of another Treasury bond is N. M and N will maintain a relatively fixed interest rate difference due to time. But the actual situation may not be the case, and there is room for arbitrage. You can hedge profits by buying more than one and shorting the other.