Abstract
This paper studies some industrial diversification strategies to improve the portfolio performance. Over the period from 2006 to 2010, the number of stocks that are required to diversify a given level systematic risk has been decreasing. However, not all the industrial diversification strategies are effective. Only a strategy in accordance with the smaller beta is able to decrease the risk level of an industrial-diversified portfolio. Hence, investors who would like to lower the risk level by diversified investment should allocate their capital according to some specific strategy.
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