The Empirical Analysis on the Function of Avoiding Risks for Stock Index Futures Market in China

What is focused by most investors is how to avoid capital market risks. This paper aims to explore the relationship between the stock market and the stock index futures market by stationarity test and co-integration test. It is indicated in the research that there has been a long-term equilibrium relationship between the two markets, and the stock market price coincides with the price of the stock index futures market which is the precondition for hedging. On this basis, the introduction of error correction model aims to explore the discipline of the short-term price volatility of the two markets. The research finds that the price of the stock index futures market fluctuates more fiercely than the stock market, and there has been a larger space for arbitraging in a short term. Therefore, the function of avoiding risks for stock index futures market should be strengthened further.