Hedge Ratio Calculator

Rs
Rs
Finance

The Hedge Ratio Calculator shows the proportion of a position that is protected against price risk. Enter the value hedged and the total exposure to get the hedge ratio.

Formula

Hedge Ratio = Value Hedged ÷ Total Exposure
  • A hedge ratio of 1.0 (100%) means the position is fully hedged.
  • 0 means unhedged; values between reflect partial protection.

Rs 600,000 hedged of Rs 1,000,000 exposure

Inputs
  • Value Hedged: 600000 Rs
  • Total Exposure: 1000000 Rs

600,000 ÷ 1,000,000 = 0.60, so 60% of the position is hedged.

Frequently asked questions

What does a 100% hedge ratio mean?
It means the entire exposure is offset by the hedge, so price moves in the underlying are fully neutralised.