Salomon Brothers, Hong Kong
	Variance
Date	Change in Short(x)	Mean(M)	x-M	(x-M)^2
14-Aug-95	1250	340	910	828100
15-Aug-95	-100	340	-440	193600
16-Aug-95	100	340	-240	57600
17-Aug-95	1100	340	760	577600
18-Aug-95	400	340	60	3600
21-Aug-95	200	340	-140	19600
22-Aug-95	-500	340	-840	705600
23-Aug-95	-1400	340	-1740	3027600
24-Aug-95	2150	340	1810	3276100
25-Aug-95	200	340	-140	19600
				8709000
Variance=	870900
Date	Change in Long(x)	Mean(M)	x-M	(x-M)^2
14-Aug-95	-170	-68.8	-101.2	10241.44
15-Aug-95	-455	-68.8	-386.2	149150.44
16-Aug-95	780	-68.8	848.8	720461.44
17-Aug-95	-1890	-68.8	-1821.2	3316769.44
18-Aug-95	240	-68.8	308.8	95357.44
21-Aug-95	280	-68.8	348.8	121661.44
22-Aug-95	120	-68.8	188.8	35645.44
23-Aug-95	2639	-68.8	2707.8	7332180.84
24-Aug-95	-2622	-68.8	-2553.2	6518830.24
25-Aug-95	390	-68.8	458.8	210497.44
				18510795.6
Variance=	1851079.56
HE=( Var on Short-Var on Net daily/Var on Short)				-1.125478884

Why is the Hedge Effectiveness (HE) significantly below 100%? What factors contribute to the discrepancy and why?