Hedging is different from speculation in the following ways.
Hedging
•Transferring the price risk faced by a person to others who are willing to bear the risk for windfall profit.
•The maintain is to cover or eliminate or minimise risk.
•Hedging may be long or short.
•Risk is less.
•Complicated process.
Speculation
•Buying and selling of financial instruments and derivatives in the hope of a profit from anticipated changes in the price of instruments.
•The main aim is to make profit from short term fluctuations.
•Speculation may be constructive or distructive.
•Risk is high.
•Easy process.
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