Balanced Wiring & its Advantages

Professional equipment solves this problem by using two closely-spaced conductors twisted together. Audio is balanced equally on these wires, flowing in a positive direction on one wire while in a negative direction on the other. Equipment looks at the voltage difference between those wires, and ignores everything else. A grounded shield is still used to prevent high-frequency noise, and it might form a hum-gathering antenna -- particularly if there are other ground connections. But since the ground isn't part of the audio path, nobody cares.

A balanced shielded cable.

Most modern circults do not use balanced wiring internally. The internal wires or printed-circuit traces are so short that noise pickup isn't a problem. But they balance the signal before it leaves, and unbalance any incoming ones. This is very easy to do with op amps or transformers. Balanced wires also reject noise that isn't coming from a ground loop. The two conductors are twisted closely together, so any interference radiated into the cable is picked up equally by both. But remember: the equipment is looking for a voltage difference between those wires. Noise is the same on both wires, so the equipment can't hear it.

Another advantage of balanced wiring

If a single-conductor shielded cable acts as an antenna, why doesn't two-conductor balanced wiring act as a double antenna? Answer: it does. Noises from nearby video or computer cables are picked up on each conductor. But remember, a balanced audio input cares only about the voltage difference between the two wires. Interference is radiated equally into each wire. Since the interference is equal on each, there's no voltage difference from it! The balanced input can't even see that the noise is there.
Or to put it into a chart:

Conductor           Audio Signal    Noise     Total on wire
    Black               +1 v          +1 v     +2 v
    White               -1 v          +1 v      0 v

Transmitted difference   2 v
                           Received difference  2 v

This noise-immunity of balanced wiring is why it's also used for high-speed computer networks. Category-5 cable contains four tightly-balanced pairs of wires. In fact, if your balanced input and output circuits are good enough, you can use Cat-5 cable for professional audio wiring! "Star Quad" is four-conductor shielded balanced cable. The four wires form a tighter, more consistent pack than two wires can and can resist even more noise. If you're using Star Quad, you must tie the two pairs of similarly-colored wires together at each end... reducing it effectively to two conductors. Don't try to use it as two balanced pairs for two different signals: this won't give you any noise-reduction benefits at all. 

- ( Source : http://www.dplay.com)