Be me, about four years old. Decide i need to drive a car for fun.Wake little brother at four in the morning and we sneak out with moms car keys. This is in the city mind you, with cars parked tightly behind each other on the curb. Get in, start the engine and lights. Can’t get the fucking hand brake lose. Luckily mom smells bullshit and comes looking for us before I figure it out. Get roasted for that to this day, mom is nearly 70 now and still tells this story to this day.
You bet on a company in a specific market and hope it goes up. Then you diversify another investment into this specific market, but in multiple companies. But you short them a little. First case, company go up, wins go up. Second case, major desaster tanks the whole market you equalize the dumping single company investment with the short in the market. Lost nearly nothing.
Hedging is about recognizing investment risk and mitigating it. That being said, hedging is not really a working strategy, it just has lots of media coverage. Hedge funds leverage a good story to convince investors to give them money to manage. They earn from managing that money without carrying three y risks. The broker always earns.
If you want you invest money with limited risk, broad market index funds area the way to go.