Scenario: Investors want to protect the value of the underlying asset portfolio against the risk of adverse developments in the stock market. Specifically when investors:
Own a diverse portfolio with codes belonging to VN30, or;
When the investor’s portfolio has a beta coefficient equivalent to the beta coefficient of the VN30 index.
Implementation strategy: Investors predict that the market will go down in the near future, but investors do not want to sell the portfolio and buy it back because of high costs. To prevent risks, investors decided to open a short position with VN30 index futures contracts to protect their portfolio against the market decline.
For example: On T+0, the investor is holding the VN30 portfolio worth 10 billion VND. The investor forecasts that in the short term the market will decline deeply and recover in the medium term and the stock portfolio will grow in the long term.
=> Investors short the VN30 index futures contract in the short term. When the market drops, the stock portfolio decreases in value, but the derivative portfolio increases in value => Balances risks for investors
