Delta hedging, the most basic but also most commonly used

Hedging strategy for trading. It is nothing to do with lawyer or taxation people. It talks about to hedge the derivative contract with its underlying contract, based on the statistic correlation from the certain periods. The words quoted here are written in a more complicated way than needed. Don't be scared away and just google delta risk hedging trading, you will have a lot clues. The second paragraph is basically repeating the first paragraph, of course the small proportional movement between two contract at certain SD level indicates better hedge. Everyone with statistic knowledge should get it , without looking into these messy words:).