Diversification: coins, stocks, gold and cash
After this lesson you can tell real diversification from owning many things that move together, read correlation in plain terms, measure concentration, and see how a mixed portfolio limits the damage when one market crashes.
Diversification: coins, stocks, gold aur cash
Diversification ka matlab hai aisi cheezein rakhna jo ek hi wajah se ek hi waqt mein na girein. Chaar coins chaar naam hain magar aksar ek hi risk, kyunke crypto market girti hai to zyada tar coins saath girte hain. Asal diversification screened halal stocks, gold-silver, cash aur, agar aap chahein, screening ke baad crypto ke chhote hisse mein phailaana hai.
Correlation -1 se +1 tak hota hai. +1 ke qareeb ka matlab saath chalna, yani do coins rakhna takreeban ek rakhne jaisa. Panic mein correlation barh jata hai. Pakistani saver ke liye gold, US stocks aur crypto teeno dollar mein hain, is liye rupay ki qeemat sab par ek saath asar karti hai. Maryam ka portfolio 47.5% gira; mixed portfolio sirf 13.6%.
Cash ko sood wale account mein na rakhein; Quran 2:278-279 baqi riba chhorne ka hukm deta hai. Islamic banking ke kuch products par ulama ki raaye mukhtalif hai, is liye apne bharosemand aalim se poochein. Gold aur silver par zakat hai; Quran 9:34-35 sona chandi jama kar ke Allah ki raah mein na kharch karne walon ko khabardar karta hai.
- Naam ginna diversification nahi; dekhein ke risk kitne alag hain.
- Panic mein sab saath girte hain; concentration pehle se napein.
- Cash riba se paak rakhein aur gold aur trading assets ki zakat na bhoolein.
Poora sabaq neeche English mein hai. Quiz English mein hai; asaan alfaaz mein.
Maryam, a software tester who works remotely from Abbottabad, felt well diversified. She owned four coins, BTC, ETH, SOL and a smaller one a colleague liked, with Rs 250,000 in each. Then the crypto market fell hard. All four dropped together, by 35% to 60%. Her Rs 1,000,000 became Rs 525,000. She had four names on her screen but one bet underneath: crypto. When the tide went out, it went out for all of them at once.
What diversification really means
Diversification means owning things that do not all fall for the same reason at the same time. Four coins are four assets but often one risk, because most coins have tended to fall together when the crypto market as a whole falls. Real diversification spreads across different kinds of assets: screened halal stocks, gold and silver, cash, and, for those who choose it after screening, a limited crypto slice.
Pakistani savers face a hidden common factor too. Gold, US stocks and crypto are all priced in dollars. When the rupee weakens, all three tend to rise in rupee terms together, and when the rupee strengthens, they lose a little together. PSX stocks and rupee cash behave differently. Knowing this helps you see what you really own.
Correlation in plain words
Correlation measures how two assets move together, on a scale from -1 to +1. Near +1, they usually rise and fall together. Near 0, there is no stable relationship. Below 0, one tends to rise when the other falls. Correlation is not fixed. In calm markets many assets look unrelated; in a panic they often fall together, so correlation tends to rise exactly when you need diversification most.
- Two coins with correlation near +1: owning both is close to owning one.
- Two assets that each swing about 60% a year, with correlation 0.2: a 50/50 mix swings about 46%.
- Rupee cash: no price swings, but inflation slowly eats its value.
- Gold: has often held up in stress, but not always, and it can fall for years.
Concentration: the risk you can measure
Concentration is how much of your wealth depends on one asset, one sector or one market. A simple test: no single coin or share should be so large that its crash would change your family's life. Many investors cap any single stock at around 10% of the portfolio, a single coin lower, and keep crypto a small slice of total wealth. These are illustrations, not rules for you; your emergency fund, debts and duties set your real limits.
Rebalancing keeps concentration in check. When one part grows far above its target share, trim it and add to the parts that fell behind. Reviewing once or twice a year is enough for most people. On spot, rebalancing means selling some of what you own, never borrowing or shorting.
Worked example: the same crash, two portfolios
Maryam: Rs 250,000 in each of four coins. Falls of 35%, 45%, 50% and 60% leave Rs 162,500 + Rs 137,500 + Rs 125,000 + Rs 100,000 = Rs 525,000. Loss: 47.5%. Gain needed to recover: 1,000,000 / 525,000 - 1 = 90.5%.
A mixed illustration, not a recommendation: Rs 250,000 crypto, Rs 300,000 KMI-30 stocks, Rs 250,000 gold, Rs 200,000 cash. Suppose the same crypto crash (-47.5%) while stocks fall 10%, gold rises 5% and cash is flat: -Rs 118,750 - Rs 30,000 + Rs 12,500 + Rs 0 = -Rs 136,250. Loss: 13.6%. Gain needed to recover: 1,000,000 / 863,750 - 1 = 15.8%.
The mixed portfolio did not avoid loss. It avoided the deep hole, and that is the whole purpose of diversification.
Two rulings shape how a Muslim spreads wealth. First, cash should not sit in an interest-bearing account: Quran 2:278-279 commands believers to give up what remains of riba. Use a current account or an Islamic banking product that a scholar you trust accepts; scholars differ on some products, so ask. Second, gold and silver held as wealth carry zakat: Quran 9:34-35 warns those who hoard gold and silver without spending in Allah's way. Diversifying into gold is permissible, but include it, and your trading assets, in your zakat each lunar year above nisab.
Education, not a fatwa. Where scholars differ, we say so. See what scholars say.
Counting names instead of risks. Five coins, three cement stocks, or gold jewellery plus gold coins can each be one bet wearing different clothes. The cost appears only in a crash, when everything you own falls together and no calm part of the portfolio is left to steady you.
Open Portfolio Doctor and enter your real holdings, or a practice portfolio if you have none yet. Read what it says about concentration. Then group your holdings by what drives them: the crypto market, PSX, dollar-priced assets, rupee cash. Write down your largest single position as a % of the total, and what a 50% fall in it would do to the whole portfolio.
Check my portfolio →Key takeaways
- Diversification means owning things that do not all fall for the same reason; four coins are often one risk.
- Correlation near +1 gives little protection, and correlations tend to rise in a panic.
- Measure concentration, keep cash away from riba, and include gold and trading assets in your zakat.
Check yourself
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Barqish is an educational platform. Nothing here is financial advice or an instruction to buy or sell, and screening is not a fatwa. Spot ownership only: no leverage, no short selling. Updated 30 September 2026.