Question.Portfolio Theory $($both "old & "modern"$)$ demonstrate that the overall risk of a portfolio of randomly selected stocks diverse stocks can reduce the portfolio risk from the stocks standalone risk and still maintain acceptable returns. The condition or dynamics that explains that the phenonium is:

$($a$)$ Randomly selected stocks in the portfolio may be correlated, but not perfectly $($identically$)$ correlated.

$($b$)$ Randomly selected stocks the portfolio may be correlated, but negatively correlated.

$($c$)$ Randomly selected stocks will most likely not be from the same industry, which makes any correlation to other stocks less.

$($d$)$ All the above.