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Sir,
With a well diversified portfolio investor can reduce or eliminate it’s unsystematic risk then what left is systematic risk.1)Can this systematic risk be reduced if investor invest in a different market ?
2) I also read in a particular answer that “company can achieve further diversification by investing in a market in which individual shareholder do not invest by themself”
a) Is it taking about systematic risk ?
b)How do companies invest in different market.Subsi or A big project also counts?
c)What if we have Apple in our portfolio in our portfolio that already has global presence.How above (2) will happen?
If we are buying shares in the same market (i.e. the same stock exchange) then although the systematic risk in each share will be different, in cannot be diversified away because all shares in that market move up and down together.
However, if you can create a portfolio of shares in different markets then in theory it might be possible to diversify the systematic risk away, because different markets might move in different ways.
But, because of increasing globalisation (e.g. companies like Apple trading world wide) the markets in different countries tend more and more to move in the same way – this makes international diversification of systematic risk less likely.
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