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As we know that stock market is of highly volatile nature and markets high volatility makes it difficult for traders to earn well here. Maintaining a well diversified portfolio helps to sustain in market and earn good returns. Following are some different form of diversification which can be considered while forming a well diversified portfolio:
1) Individual company and industry based
Traders must keep companies belonging to different industries. If in case a industry is not performing well and earing you losses then at such times industry which is performing well will help you to compensate your loss.
2)Style based
Stocks are of various types like one with fixed income , growth, yearly dividend and more. You can choose different style stocks to ensure your good earnings every time.
3) Asset class based
You can pick from different class of assets like equity, commodity.
Diversification is helpful in managing overall risk of portfolio but over diversification is never recommended.
1) Individual company and industry based
Traders must keep companies belonging to different industries. If in case a industry is not performing well and earing you losses then at such times industry which is performing well will help you to compensate your loss.
2)Style based
Stocks are of various types like one with fixed income , growth, yearly dividend and more. You can choose different style stocks to ensure your good earnings every time.
3) Asset class based
You can pick from different class of assets like equity, commodity.
Diversification is helpful in managing overall risk of portfolio but over diversification is never recommended.