Real-world example
Rohan has ₹10 Lakhs. He invests ₹5 Lakhs in HDFC Bank. If HDFC Bank falls 20%, his total portfolio falls by 10%. That is high concentration risk.
Knowledge base
Concentration Risk
The danger of having too much of your money in a single stock or sector.
Explain like I’m 5
- Imagine carrying 10 eggs. If you put them all in one basket and drop it, you lose everything.
- In investing, if you put 50% of your money in one stock, you are 'concentrated'.
- If that one business fails, your entire wealth takes a huge hit.
See it in PortoAI
Visualizes your concentration across stocks and sectors.