Portfolio

Diversification
Why we diversify?
Portfolio diversification is one of
the most important functions for
every portfolio of stocks and assets
under investment management.
On the other hand, with proper
The idea is to create a portfolio and well-structured
that includes different investments diversification implementation,
in order to reduce the overall risk the parallel investments from
of the portfolio. Especially when the same portfolio may
an investor buys a company’s stock compensate for the potential
and in the event that there is a loss from a single stock or asset
negative downside with this investment. 
particular company, investors may
suffer losses.
Implementation

A diversified portfolio does not

guarantee immunity against losses,
but has the ability to significantly
reduce the expected risk of the
overall portfolio and if
implemented properly can make
returns, regardless of asset, stock
or market downside.
The basic structure

Portfolio diversification should

not take place arbitrarily as
certain procedures and rules
should include the combination
of mathematical, statistical and
economic concepts.
A diversified portfolio could
include more than 10 different
types of stocks, under different
industries and sectors.
Diversification style

When investing or managing a

diversified portfolio with different
asset classes, these asset-class
when diversified, could include
stocks, commodities, precious
metals, bonds and different
currencies. Or it could include
difference assets classes which
could be in the same industry
sector.
Importance of diversification
Diversification is a very
important tool on the hands
of those managing assets,
investing in stock markets or
other industry markets and is
the cornerstone of modern
portfolio theory in financial
economics.