In view of globalization and increasing business competition, the companies are looking out for new means of profit maximization and increasing their shareholder value. Diversification is one such sought-after phenomenon in which the companies opt for increasing profits and simultaneously reducing risks. This research tried to find answer to the question, whether product diversification reduces the systematic risk of the companies while increasing their shareholder value or not? Two regression models were framed for the study which tested the hypotheses for market risk as well as for corporate performance. The results of the study revealed that with an increase in the corporate risk, there is an increase in the profitability. Similarly, a positive relationship was observed between systematic risk and growth of a corporate, that is, with an increase in systematic risk, the growth opportunities of a firm increase. Whereas, the research could not find any significant relationship between corporate size and systematic risk, beta.

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