Diversification
Diversification is the principle whereby distributing capital across several assets or categories of assets, rather than concentrating it on a single asset, can reduce overall risk exposure.
The underlying idea is that different assets tend to react differently to the same events: a loss in one asset may be partly offset by gains in others. Diversification reduces so-called specific risk, but it does not eliminate market risk, which is common to all assets.
It is a descriptive concept in risk management theory, not a recommendation; its concrete application depends on the objectives and situation of each individual. Crypto-assets, in particular, remain highly volatile assets.
Disclaimer: This entry is for information purposes only and does not constitute investment advice or a recommendation.
