Loss aversion is a behavioral economics theory. That explains the behavior of some people who tend to avoid losses. You could say that some people do not want to incur losses, even if the profit behind those losses is double the potential loss.

The risk aversion here is an act, or you can say it is the risk profile of investors who tend to avoid risky assets. In this case, this is not a bad thing but more about managing assets based on the investor risk profile.

Although loss aversion and risk aversion are closely related, they describe different aspects of decision-making in finance and trading. Loss aversion is the tendency for individuals to experience losses more intensely than gains of the same size. For instance, the disappointment of losing $100 is often stronger than the satisfaction of earning $100. This can cause traders to avoid closing losing trades in the hope that prices will recover.

Risk aversion, however, refers to a preference for certainty and stability over options that involve greater uncertainty. A risk-averse investor may favour investments with lower but more predictable returns rather than pursuing opportunities with higher potential rewards and greater volatility.

The main distinction is that loss aversion is driven by the emotional impact of losing money, while risk aversion reflects a person's overall attitude toward uncertainty. Understanding both concepts can help investors make more rational decisions and avoid common psychological biases in the financial markets.