Hedging is a financial activity designed to protect any investor. Like any other social practice, (recurrent behavior in a given society), it depends on the society involved. Here I concentrate on the community of electronic trading participants, who have access to mathematical ideas and tools, which reduce risks.
Two examples are: Citadel, and Renaissance Technologies.
The important think to emphasize, is that human activities are subjected to the laws of statistics, as explained in David J. Hand recent book: "The Improbability Principle".
Unlike the old Classical Mechanics, with emphasis an deterministic behavior, we have to follow the guide of non-linear mathematics, as first observed by Edward Lorenz, for the same Calculus based mathematics, invented by Leibniz and Newton.
Another way to state the problem of hedging is: Predict with Stochastic tools.
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