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David Harper explains how stock index futures can be used to hedge an equity portfolio using the formula from John Hull's book on derivatives. The number of contracts needed to hedge is calculated as the difference between the target beta and current beta of the portfolio, multiplied by the ratio of the portfolio value to the value of the stocks underlying one futures contract. For example, if a portfolio worth $1 million has a beta of 1.4 and the S&P index value is 1400, the value of a single S&P futures contract is then multiplied by this calculation.