The Effect of Cryptocurrency on Investment Portfolio Effectiveness
| Autor: | Yoda Diputra, Yanuar Andrianto |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
Cryptocurrency
business.industry Financial economics 020209 energy 05 social sciences 02 engineering and technology FinTech Investment portfolio Currency 0502 economics and business 0202 electrical engineering electronic engineering information engineering Portfolio 050207 economics business Database transaction Modern portfolio theory Stock (geology) |
| Zdroj: | Journal of Finance and Accounting. 5:229 |
| ISSN: | 2330-7331 |
| DOI: | 10.11648/j.jfa.20170506.14 |
| Popis: | The emergence of financial technology in the last 10 years has created a new type of asset that is Cryptocurrency. Cryptocurreny offers a small transaction fee without involving a third party in its transaction and the ability to make its users anonymous. It became one of its main selling points and was quickly accepted widely in the financial world. Cryptocurrency price movements become volatile. For examples, Bitcoin issued in 2009, the value is not more than USD 10, but in early June 2017, Bitcoin is worth about USD 3000 (Bloomberg, July 5th, 2017). Many investors are interested to invest in Cryptocurrency, especially investors with high risk tolerance. This study aims to find the effects of Cryptocurrency on well-formed portfolios. The assets we use are Foreign Currency, Commodity, Stock, and ETF. The Cryptocurrency we will use is Bitcoin, Ripple and Litecoin. Using the Modern Portfolio Theory approach, we can create an investment portfolio. The results show that the portfolio with Cryptocurrency indeed increases the effectiveness of the portfolio in two ways. The first is to minimize the standard deviation and the second is to create more allocation options for investors to choose from. The optimum allocation of Cryptocurrency is from 5% to 20% depending on the risk tolerance of the investor. |
| Databáze: | OpenAIRE |
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