Reductions in the variance of risk in a portfolio of stocks can only be accomplished when the the correlation among the stocks is:

A variance of risk in a portfolio of stocks can be reduced when the correlation among the stocks or two stocks is negative. In reality, perfect negative correlation is difficult to attain (if not impossible). A company must split its assets or attempt to find several assets that respond to different forces in the economy. When one asset is losing, there’s a good chance that the other one is gaining.