Assume that two investors each hold a portfolio, and that portfolio is their only asset.Investor A's portfolio has a beta of minus 2.0, while Investor B's portfolio has a beta of plus 2.0.Assuming that the unsystematic risks of the stocks in the two portfolios are the same, then the two investors face the same amount of risk.However, the holders of either portfolio could lower their risks, and by exactly the same amount, by adding some "normal" stocks with beta = 1.0.

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Both portfolios would be twice as risky as a portfolio of average stocks.their risks would decline if they added b = 1.0 stocks, as those stocks would move the portfolios' betas toward 1.0.

Assume That Two Investors Each Hold a Portfolio, and That