How to Calculate Basis Risk?
Basis Risk calculator uses Basis Risk = Future Price of Contract-Spot Price of Hedged Asset to calculate the Basis Risk, Basis Risk refers to the risk that arises when there is a mismatch or divergence between the price movements of a hedging instrument (such as a futures contract or derivative) and the underlying asset or liability being hedged. Basis Risk is denoted by BR symbol.
How to calculate Basis Risk using this online calculator? To use this online calculator for Basis Risk, enter Future Price of Contract (FPC) & Spot Price of Hedged Asset (SPHA) and hit the calculate button. Here is how the Basis Risk calculation can be explained with given input values -> 14755 = 22255-7500.