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How we decrease the risk in a portfolio? What actions should we follow?

How we decrease the risk in a portfolio? What actions should we follow?

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Answer #1

We can decrease the risk in the portfolio by following these strategies-

1.allocation of money into different asset classes in order to neutralize the firm specific risks.

2. Adoption of hedging strategies through forwards and futures market.

3. Exposure into international stocks can also be a good diversification idea.

4. buying of volatility index options always protects against any kind of downside moments.

5.adoption of Option hedging strategies like straddle and strangle can also help to a largest possible extent.

6. Entering into swap agreements and neutralizing risks.

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