Cryptocurrency Investment Risk Analyzer

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Select Cryptocurrency:

Investment Amount ($):

Investment Period (days):

Result

Short result:

How to use

Disclaimer: This calculator is intended for informational purposes only and should not be considered financial advice. Always conduct your own research or consult a financial professional before making investment decisions.

How it works:

Calculate Daily Return:\[
\text{Daily Return}_t = \dfrac{P_t – P_{t-1}}{P_{t-1}}
\]Where:
- $ P_t $: Price at day $ t $
- $ P_{t-1} $: Price at day $ t-1 $
Calculate Mean Return ($ \mu $):\[
\mu = \dfrac{1}{n} \sum_{t=1}^{n} \text{Daily Return}_t\]Where:
- $ n $: Number of returns
Calculate Standard Deviation ($ \sigma $):\[
\sigma = \sqrt{\dfrac{1}{n – 1} \sum_{t=1}^{n} \left( \text{Daily Return}_t – \mu \right)^2}
\]
Calculate Annualized Volatility:\[
\text{Volatility (Annualized)} = \sigma \times \sqrt{365} \times 100\%
\]
Calculate Annualized Expected Return:\[
E[R] = \mu \times 365
\]
Calculate Sharpe Ratio:\[
\text{Sharpe Ratio} = \dfrac{E[R] – R_f}{\sigma \times \sqrt{365}}
\]Where:
- $ R_f $: Risk-free rate (e.g., 1% or 0.01)

Date publish: 29.10.2024 | Author: Calcwizard

Cryptocurrency Investment Risk Analyzer is an extremely powerful tool specifically designed to help investors assess how risky their cryptocurrency investments are. It will give you some insight into how volatile and high-risk various cryptocurrencies are based on historical price data as it calculates volatility (price convolutions), real values, etc.

How the tool works

Cryptocurrency selection. Users can select a working demo model from several of the most common digital currencies. Each cryptocurrency has its own market characteristics that will have a significant impact on the degree of volatility and risk. Nevertheless, in the interface, you have the option to select your favorite asset.

Bitcoin (BTC)
Ethereum (ETH)
Litecoin (LTC)
Cardano (ADA)
Solana (SOL)
Polkadot (DOT)
Uniswap (UNI)
USD Coin (USDC)
Cosmos (ATOM)
EOS
Theta (THETA)
VeChain (VET)
Neo

Investment Type. Select the specific dollar amount of investment you would like to invest.

Investment period. If you use an investment period of 30 days, this gives a monthly perspective and a longer term for broader trend analysis.

Historical data. The tool retrieves historical price data for the selected cryptocurrency using the CoinGecko API. It takes the prices for the start and end date, looking for inflection points in the return data to calculate risk metrics.

The calculate volatility function calculates the standard deviation of returns in price, annualized deviation and expresses it as a percentage, which shows us how much the asset varies over time.

What happens is that we calculate the trade-off between the two assets and analyze their inherent characteristics in terms of correlation and the Sharpe ratio in relation to the risk-free rate. This coefficient gives users an idea of whether the potential returns of the assets are worth their risk.

Calculation results. Once all calculations are completed, the tool shows the following:

Annualized Volatility. Estimates the degree of change in the value of an investment over the course of a year, in other words, risk.

Sharpe Ratio. Measures how well an investment rewards an investor for taking risk. Larger numbers indicate a higher return for every unit of risk taken.

Investment Offer The tool makes an offer based on the Sharpe Ratio it calculates.

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