When an investor attempts to protect himself from risks he does not wish to assume he is said to be hedging. The term "to hedge" describes a general concept that underlies certain Investment decisions, for example, the decision to match a long-term Investment with long-term financing, to finance a risky industrial Investment with Equity capital rather than borrowed capital, etc. See also Hedging principle.

(See Chapter 15 The financial markets of the Vernimmen)

To know more about it, look at what we have already written on this subject