The offset method tests the effectiveness of a hedging relationship by comparing the changes in value of the underlying transactions and the hedging transactions of a hedging relationship. The main key figure is the ratio of the two values, namely the hedge ratio. The offset method in its simplest form has the disadvantage that the result can fluctuate greatly for minor changes in value. This means that effective hedging relationships can be classified wrongly as being ineffective. Therefore, an enhanced offset method is available which you can use to restrict the influence of very minor changes in value on the effectiveness test.
This enhanced method is selected by entering threshold value. With this parameter you determine the amount at which fluctuations in value are considered to be of little relevance for the valuation of hedging relationships. Regardless of the threshold value, you can influence the specificity for the effectiveness measurement (optional) with the transition speed parameter. You use the transition speed to influence the transition area between the area in which the noise threshold value dominates and the area in which it does not play a role. The greater the transition speed, the smaller the transition area.
Hierarchy 
EA-FINSERV (Software Component) SAP Enterprise Extension Financial Services
FIN-FSCM-TRM-TM (Application Component) Transaction Manager
FTHM_HEDGING_RELATIONSHIP (Package) Hedge Management - Package hedging relationship
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