What is 'definitive effectiveness indicator' in SAP FS-BA-PM-HP - Hedge Processes?

definitive effectiveness indicator - Overview

• Component: FS-BA-PM-HP

• Component Name: Hedge Processes

• Description: States whether a hedging relationship is effective or not. The definitive effectiveness indicators are derived from the results of the retrospective and prospective effectiveness tests.

definitive effectiveness indicator - Details

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  Key Concepts: 
  A definitive effectiveness indicator is a metric used in the FS-BA-PM-HP Hedge Processes component of SAP to measure the effectiveness of a hedge. It is calculated by comparing the expected value of a hedge to its actual value. The indicator is used to determine whether or not a hedge is working as intended.
  
  How to use it: 
  The definitive effectiveness indicator can be used to assess the performance of a hedge and determine whether or not it is working as intended. It is calculated by comparing the expected value of a hedge to its actual value. If the indicator is below a certain threshold, then it may be necessary to adjust the hedge or take other corrective action.
  
  Tips & Tricks: 
  When using the definitive effectiveness indicator, it is important to remember that it is only one metric and should not be used in isolation. Other factors such as market conditions and risk management strategies should also be taken into account when assessing the performance of a hedge.
  
  Related Information: 
  The definitive effectiveness indicator is part of the FS-BA-PM-HP Hedge Processes component of SAP. For more information on this component, please refer to the SAP documentation or contact your SAP representative.