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How does standard deviation affect the risk assessment of digital currencies?

avatarMatija AntićDec 25, 2021 · 3 years ago1 answers

Could you please explain in detail how standard deviation affects the risk assessment of digital currencies?

How does standard deviation affect the risk assessment of digital currencies?

1 answers

  • avatarDec 25, 2021 · 3 years ago
    Standard deviation is an important factor in the risk assessment of digital currencies. It measures the variability or dispersion of the price of a cryptocurrency from its average value. A higher standard deviation indicates a greater degree of price volatility, which means that the price of the digital currency can fluctuate more widely. This increased volatility introduces additional risk for investors, as it can lead to larger gains or losses. Therefore, when assessing the risk of investing in digital currencies, it is important to consider the standard deviation as it provides insights into the potential price movements and the associated risks. It allows investors to gauge the level of risk they are comfortable with and make informed investment decisions accordingly.