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Stand-alone risk is only a part of total risk and pertains to the risk an investor takes by holding only
one asset. Risk is the chance that some unfavorable event will occur. For instance, the risk of an
asset is essentially the chance that the asset’s cash flows will be unfavorable or less than expected. A
probability distribution is a listing, chart or graph of all possible outcomes, such as expected rates of
return, with a probability assigned to each outcome. When in graph form, the tighter the probability
distribution, the less uncertain the outcome.



Portfolio Risk: In risk analysis, it is the risk that a particular combination of projects, assets, units or
whatever is in the portfolio will fail to meet the overall objectives of the portfolio because of poor
balance of risks within the portfolio.

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Stand alone&portfoliorisk

  • 1. Stand-alone risk is only a part of total risk and pertains to the risk an investor takes by holding only one asset. Risk is the chance that some unfavorable event will occur. For instance, the risk of an asset is essentially the chance that the asset’s cash flows will be unfavorable or less than expected. A probability distribution is a listing, chart or graph of all possible outcomes, such as expected rates of return, with a probability assigned to each outcome. When in graph form, the tighter the probability distribution, the less uncertain the outcome. Portfolio Risk: In risk analysis, it is the risk that a particular combination of projects, assets, units or whatever is in the portfolio will fail to meet the overall objectives of the portfolio because of poor balance of risks within the portfolio.