A General Strategy on How to Select a Crypto Fund, Part 2 By Cointelegraph

A General Strategy on How to Select a Crypto Fund,


A General Strategy on How to Select a Crypto Fund, Part 2

With about 800 crypto funds relying on a new asset class, which has its own properties, it is essential to assess them through an appropriate framework. We provide a basic framework of useful metrics to assess the true risk of a crypto fund as a quantitative screening tool. Short-listed funds can then be assessed in more detail through a classic due diligence process.

Assessing the expected return of a directional fund

Investors in a directional fund should first have a clear understanding of the dynamic of the fund’s overall strategy in order to realize where the performance will come from and over what period before assessing whether the risk taken to achieve such results is worth it. This is achieved through discussions with the fund manager.

Understanding the fundamentals of the strategy

Understanding the strategy timeframe

A nonlinear analysis framework

1. Volatility

2. Correlation

3. Beta

4. Value at Risk

Sharpe ratio

Sortino ratio

Drawdowns

  1. A crypto fund with overall high volatility doesn’t necessarily equate to a highly risky one.
  2. A high global correlation of a crypto fund to a benchmark doesn’t necessarily mean that the fund will move in sync with the benchmark most of the time.
  3. The global beta of a crypto fund has no value unless it is assessed in a nonlinear manner.

Continue Reading on Coin Telegraph

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

Cointelegraph


Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME