Unsystematic
Risk
Unsystematic
risk characteristics can be explained in terms of industry specific and
diversification.
1. Industry Specific
Unsystematic
risk is entity specific. Therefore it is not necessarily suffered by other
entities. While systematic risk is supposed to suffered by all the companies
2. Diversified
Unsystematic
risk can be reduced by diversification of investment portfolio. Diversification
is holding securities of different companies, instead of single company. As
different companies suffer different risk, therefore risk is balance out.
