What is a good Sortino ratio for evaluating the performance of digital currency investments?

3 answers

• Arik SabbanApr 15, 2022 · 3 years ago
  The Sortino ratio is a risk-adjusted measure that focuses on the downside risk of an investment. It is calculated by dividing the excess return of the investment over a risk-free rate by the standard deviation of the downside deviation. In the context of digital currency investments, a good Sortino ratio would indicate that the investment has a favorable risk-return profile, with lower downside risk compared to the potential upside. However, what is considered a good Sortino ratio can vary depending on the investor's risk tolerance and investment objectives. Generally, a higher Sortino ratio is preferred as it suggests a higher risk-adjusted return.
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• Rojas EdmondsonFeb 14, 2024 · a year ago
  The Sortino ratio is a useful tool for evaluating the performance of digital currency investments because it takes into account the downside risk, which is particularly important in volatile markets like cryptocurrencies. A good Sortino ratio for digital currency investments would typically be above 1, indicating that the investment has a positive risk-adjusted return. However, it's important to note that the Sortino ratio should not be the sole factor in evaluating an investment, as it does not capture the overall performance or potential future returns.
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• Marco Antonio ArroyoApr 27, 2023 · 2 years ago
  When it comes to evaluating the performance of digital currency investments, the Sortino ratio can be a valuable metric. It measures the risk-adjusted return based on the downside deviation, which is the standard deviation of negative returns. A good Sortino ratio for digital currency investments would generally be above 1, indicating that the investment has a positive risk-adjusted return. However, it's important to consider other factors such as the investment's volatility, liquidity, and market conditions. It's always recommended to diversify your investments and consult with a financial advisor before making any investment decisions.
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