Here are the results.

Performance, you see IC for ice cream, For umbrella.

Plus 23, -26.

And then, the second line underneath this, I've put downside volatility.

This is a measure on which we will return.

I will give you more details as to how we compute this.

But with downside deviation or downside volatility, what we focus on is the left,

the part of the distribution of returns which is to the left of the mean, i.e.,

subpar returns, for that is more interesting when you're an investor.

So question to you, and that's a quiz, let's assume,

you don't know whether it's going to be a hot summer or a rainy one.

So you don't know whether it's going to be the ice creams or the umbrella who wins.

So you decide to put half of your eggs in the ice cream firm and in the baskets and

the other half in the umbrella perhaps, and this gives you the 50/50 portfolio.

So the average performance as we may expect is

50% of 23 plus 50% -26 and

that's -1.5, pretty straightforward.

Now, now about the risk?

How about the downside deviation?

Is it the average, i.e., between 17.2 and 8.4, i.e., 12.8?

In other words, if we present this graphically, would you say that the,

we have the ice creams far on the right, we have the umbrellas down on the left.

Would you say that the 50:50 portfolio lies exactly in the middle or

straight line that goes between these 2 assets?

We can think of ice creams are being equities and umbrellas as being bonds?

Will the 50:50 portfolio be exactly there?

Quiz for you.

Think about this.

The risk of an average portfolio,

say 50 umbrellas and 50 ice creams is not equal to

the average of the risks of these 2 firms or two assets.

And you see from this table here.

We have performance.

We have downside volatility and you see the 50:50 portfolio.

That's very interesting actually.

Look at this, we have 50:50, -1.5 for the return and

5.2 for the downside risk, i.e.,

the 50:50 portfolio is actually less risky

than the least risky of these firms,

which are umbrellas, which is umbrellas, the umbrella firm.

So it's interesting.

If you think of this is being equities versus bonds, we could have that.

When you diversify, you end up with a portfolio which is less

risky than the least risky asset which is bonds.

So this is the magic impact of diversification on which we will return.