In Figure, why does the line decline steeply at first and then flatten out?

The standard deviation of a portfolio tends to 60% decline as more stocks are added to the portfolio. The standard 50% deviations of AMD and American Airlines stocks are 56.4% and 47.8% 40% respectively when they are held in isolation However, the standard 30% deviation of a portfolio containing equal investments in both stocks is just 45%. The portfolio is less volatile than either stock in the 10% portfolio. The risk that diversification eliminates is called unsystematic 0% risk. The risk that remains, even in a diversified portfolio, is called systematic risk Portfolio Standard Deviation Advanced Micro Devices Advanced Micro Devices + American Airlines Advanced Micro Devices + American Airlines + Wal-Mart Portfolio of 11 Stocks unsystematic 20% standard deviation of entire stock market-19.8% systematic 2 6 9 10 1 12 7 Number of Stocks 0