Adding cryptoassets to the portfolio improves risk-return ratio

Adding cryptoassets to the portfolio improves risk-return ratio

Transfero’s monthly report points out that adopting a small parcel of bitcoin to a stock portfolio can more than double the attractiveness of the investment

Adding cryptoassets to the portfolio improves risk-return ratio

By Editorial Staff

The adoption of a small portion of cryptoassets in a portfolio can considerably increase the risk-return ratio of an investment and, consequently, its attractiveness. The statement is in the monthly analysis report of the Research Team of Transfero Swiss.

The analysis took into account the comparison between a portfolio equally distributed among the 20 U.S. stocks with the largest market capitalization, and a similar portfolio with 22 assets, but in this case it included the 20 stocks plus bitcoin and ethereum. The performance was also compared to the S&P 500 index of the U.S. stocks.

In the portfolio with only 20 stocks, the return from August 2016 to the beginning of March was of 82.4%. When the two cryptocurrencies were added, the percentage rose to 413.9%. Conversely, the S&P 500 rose 34.2% in the period. In addition, the risk-return ratio went from 1.37 to 3.00 in the portfolio with cryptoassets. The higher the index, the more attractive is the return on investment in relation to its risk.

Apart from the risk-return ratio of the cryptoassets

According to the report, the crypto asset volatility has increased in the last two months, with the exception of the bitcoin, whose variance has remained constant at 40% and remains the lowest of the analyzed assets. In addition, most cryptoassets are correlated with the bitcoin.

In the bitcoin’s technical analysis, the report points to prices at US$ 8,500, with an increase in demand for purchase in early March, which could make the bitcoin reach US$ 9,500 in the short term. Exceeding this price level can disrupt the bitcoin’s downward trend and indicate new resistance above US$ 10,350.