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

1 answers

• Dec 15, 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.
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