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Arbitrage is the simultaneous purchase and sale of equivalent assets at prices which guarantee a fixed profit at the time of the transactions.
Hedging is the simultaneous purchase and sale of two assets in the expectation of a gain from different subsequent movements in the price of those assets. Usually the two assets are equivalent in all respects except maturity.
Arbitrage simply the price difference between different markets of same things, so people earn profit due to the non symmetric information of consumers. Hedging is the investment in different securities to offset the risk with zero correlation. Thanks
