The difference between portfolio theory and capital asset pricing model (CAPM) is explained by the following factors
1. Portfolio theory is concerned with total risk as measured standard deviation. CAPM is concerned with systematic or market risk only using beta factor.
2. Portfolio measures the risk of all assets held in a portfolio. CAPM measures the risk of individual securities/ assets that would be added into a portfolio.
3. In evaluative portfolio performance portfolio theory measures the performance in terms of per unit of total risk
CAPM measures the performance in terms of returns per unit of systematic risk i.e.