Markowitz Portfolio Theory deals with the risk and return of portfolio of investments. Before Markowitz portfolio theory, risk & return concepts are handled by the investors loosely. The investors knew that diversification is best for making investments but Markowitz formally built the quantified concept of diversification. He pointed out the way in which the risk of portfolio to an investor is reduced through diversification. The particular measure of portfolio risk was first developed by the Markowitz and the expected risk & return for portfolio are derived on the basis of the covariance relationship.