Which concept refers to the risk that the hedged position may not experience the same price changes?

The concept that refers to the risk that the hedged position may not experience the same price changes is known as basis risk. This type of risk arises when there is a discrepancy between the price movements of the asset being hedged and the price movements of the hedging instrument. For instance, if an investor uses a futures contract to hedge an investment in a stock, there may be instances where the price of the stock and the corresponding futures contract do not move in perfect correlation due to differences in supply and demand dynamics, market conditions, or other economic factors.

In this scenario, even though the intent is to mitigate risk through hedging, basis risk highlights that the hedge may not perform as effectively as anticipated, potentially leading to losses or reduced profitability. Understanding basis risk is crucial for effective risk management in investments since it can significantly impact the overall effectiveness of hedging strategies.

Other concepts such as liquidity risk, operational risk, and credit risk pertain to different aspects of risk in finance, but they do not specifically address the mismatch in price changes between hedged and hedging instruments, which is the key focus of basis risk.