Does diversification increase your returns and reduce risk?

"You shouldn't put all your eggs in one basket" is a saying you would have heard a100 times when it comes to investing. The saying is often used to convey the idea you should always diversify your portfolio.

But why should you diversify?

In this video, Karthik explain the two major risks in your portfolio and how diversification helps in reducing those risks.

Risk is an intuitive concept that people understand. But risk is omnipresent in the markets. Understanding what risk is, how to measure it can help you build a better portfolio. To learn about risk, please check out the risk management module: https://zerodha.com/varsity/module/risk-management/

Discussion about risk also leads to the question of whether you can hedge it. Lucky for you, we have a chapter dedicated to that: https://zerodha.com/varsity/chapter/hedging-futures/