Systematic risk is a group of large assets (i.e. market risk or non-diversifiable risk).
Unsystematic risk – also known as nonsystematic risk (diversifiable risk or asset-specific risk) is the opposite, one or small group of assets. Depending on the conditions of the market, general economic conditions may affect a company’s financial health.
Answer the following questions in 100 word:
Unsystematic risk can be reduced with diversification, but systematic risk cannot. Why?
Why not diversify unless the principle of diversification is not reducing risk?