10 Stocks Reduces Risk by 80% in Asia [CHART]

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10 Stocks Reduces Risk by 80% in Asia [CHART]
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Despite 60% Loss On Shorts, Yarra Square Up 20% In 2020

Yarra Square Investing Greenhaven Road CapitalYarra Square Partners returned 19.5% net in 2020, outperforming its benchmark, the S&P 500, which returned 18.4% throughout the year. According to a copy of the firm's fourth-quarter and full-year letter to investors, which ValueWalk has been able to review, 2020 was a year of two halves for the investment manager. Q1 2021 hedge fund Read More


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10 Stocks Reduces Risk by 80% in Asia - #Diversification #ChartOfTheDay


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  • Diversification is the benefit in risk reduction you get from adding additional stocks to your portfolio
  • In Asia, having five stocks in your portfolio reduces risk by 65% compared to holding only one stock
  • At 10 stocks you have reduced risk by 80% and with 20 stocks in your portfolio you have diversified away 90% of company-specific risk
  • Adding more than 30 stocks to your portfolio gives limited additional benefits. Diversification follows the law of diminishing returns

Full paper available for free at SSRN.

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