, ▁and ▁un system atic ▁risk ▁which ▁is ▁also ▁known ▁as ▁id ios ync r atic ▁risk ▁or ▁divers ifiable ▁risk . ▁System atic ▁risk ▁refers ▁to ▁the ▁risk ▁common ▁to ▁all ▁se cur ities — i . e . ▁market ▁risk . ▁Un system atic ▁risk ▁is ▁the ▁risk ▁associated ▁with ▁individual ▁assets . ▁Un system atic ▁risk ▁can ▁be ▁divers ified ▁away ▁to ▁smaller ▁levels ▁by ▁including ▁a ▁greater ▁number ▁of ▁assets ▁in ▁the ▁port folio ▁( specific ▁ris ks ▁" aver age ▁out "). ▁The ▁same ▁is ▁not ▁possible ▁for ▁system atic ▁risk ▁within ▁one ▁market . ▁Depending ▁on ▁the ▁market , ▁a ▁port folio ▁of ▁approximately ▁ 3 0 – 4 0 ▁se cur ities ▁in ▁developed ▁mark ets ▁such ▁as ▁the ▁UK ▁or ▁US ▁will ▁render ▁the ▁port folio ▁sufficiently ▁divers ified ▁such ▁that ▁risk ▁expos ure ▁is ▁limited ▁to ▁system atic ▁risk ▁only . ▁In ▁developing ▁mark ets ▁a ▁larger ▁number ▁is ▁required , ▁due ▁to ▁the ▁higher ▁asset ▁vol at ilities . ▁ ▁A ▁rational ▁invest or ▁should ▁not ▁take ▁on ▁any ▁divers ifiable ▁risk , ▁as ▁only ▁non - d ivers ifiable ▁ris ks ▁are ▁reward ed ▁within ▁the ▁scope ▁of ▁this ▁model . ▁ ▁Therefore , ▁the ▁required ▁return ▁on ▁an ▁asset , ▁that ▁is , ▁the ▁return ▁that ▁compens ates ▁for ▁risk ▁taken , ▁must ▁be ▁linked ▁to ▁its ▁risk iness ▁in ▁a ▁port folio ▁context — i . e . ▁its ▁contribution ▁to ▁overall ▁port folio ▁risk iness — as ▁opposed ▁to