Volatility Transmission and Risk Hedging Strategy in International Financial Market

Abstract

With the deepening integration of the global economy and finance, the interconnectedness among international financial markets
has significantly strengthened. Financial fluctuations in one country or region can rapidly transmit globally through various channels such
as trade, capital flows, and investor psychology, substantially increasing the vulnerability and systemic risks of the global financial system.
This paper aims to thoroughly analyze the internal mechanisms and primary channels of financial volatility transmission in international
markets. Building on this foundation, it systematically explores risk hedging strategies that various market participants (including institutional investors and multinational corporations) can employ to mitigate such external shocks. Through theoretical analysis and strategic
synthesis, this study argues that in the complex and volatile international financial environment, establishing a diversified, dynamic, and
comprehensive risk hedging framework rather than relying on a single tool, is key to effectively managing cross-border financial risks and
safeguarding asset security and operational stability. This research seeks to provide theoretical references and practical guidance for market entities in risk decision-making.