Litecoin Volatility

LTC
 Crypto
  

USD 76.46  1.49  1.91%   

Litecoin appears to be extremely risky, given 3 months investment horizon. Litecoin has Sharpe Ratio of 0.11, which conveys that digital coin had 0.11% of return per unit of risk over the last 3 months. Our standpoint towards estimating the volatility of a crypto is to use all available market data together with crypto-specific technical indicators that cannot be diversified away. By analyzing Litecoin technical indicators you can presently evaluate if the expected return of 0.59% is justified by implied risk. Please exercise Litecoin's Downside Deviation of 5.34, mean deviation of 3.74, and Risk Adjusted Performance of 0.1443 to check out if our risk estimates are consistent with your expectations.
  
Litecoin Crypto Coin volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of Litecoin daily returns, and it is calculated using variance and standard deviation. We also use Litecoin's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of Litecoin volatility.

690 Days Market Risk

Extremely risky

Chance of Distress

Below Average

690 Days Economic Sensitivity

Almost neglects market trends
Since volatility provides cryptocurrency investors with entry points to take advantage of coin prices, investors in projects such as Litecoin can benefit from it. Downward market volatility can be a perfect environment for traders who play the long game. Here, they may buy additional Litecoin shares at lower prices. For example, an investor can purchase Litecoin coin that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of Litecoin's crypto rise, investors can sell out and invest the proceeds in other coins with better opportunities. Investing in volatile markets will allow investors in evolving Defi or crypto projects such as Litecoin to generate better long-term returns.

Moving against Litecoin

-0.57MIOTAIOTAPairCorr
-0.53SSPSSPPairCorr
-0.51ZENHorizenPairCorr
-0.51SYSSysCoinPairCorr
-0.51GRINGRINPairCorr

Litecoin Market Sensitivity And Downside Risk

Litecoin's beta coefficient measures the volatility of Litecoin crypto coin compared to the systematic risk of the entire stock market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents Litecoin crypto coin's returns against your selected market. In other words, Litecoin's beta of -0.4 provides an investor with an approximation of how much risk Litecoin crypto coin can potentially add to one of your existing portfolios.
Litecoin exhibits above-average semi-deviation for your current time horizon. We encourage cryptocurrency investors to investigate Litecoin individually to make sure intended market timing strategies and available technical indicators are consistent with their estimates about Litecoin projected systematic risk. Please note that many cryptocurrencies are speculative and subject to artificial price hype. Ensure you understand the upside potential and downside risk of investing in Litecoin. We encourage all cryptocurrency investors to look for signals such as email spams, message board hypes, claims of breakthroughs, volume upswings, sudden news releases, promotions that are not reported, or demotions released before the public announcements. Please also check the biographies and work history of current and past project contributors before investing in high-volatility crypto coins. You can indeed make money on Litecoin if you perfectly time your entry and exit. However, remember that cryptos that have been the subject of artificial hype usually cannot maintain its increased price for more than a few days. The price of a promoted high-volatility instrument will almost always revert. The only way to increase coin holder value is through legitimate performance analysis backed up by solid fundamentals of the project the coin represents. Understanding different market volatility trends often help investors time the market. Properly using volatility indicators enable traders to measure Litecoin's crypto coin risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Litecoin's price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different cryptos as prices fall or investing in DeFi projects.
3 Months Beta |Analyze Litecoin Demand Trend
Check current 90 days Litecoin correlation with market (NYSE Composite)

Litecoin Beta

    
  -0.4  
Litecoin standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. Typical volatile equity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.

Standard Deviation

    
  5.37  
It is essential to understand the difference between upside risk (as represented by Litecoin's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of Litecoin's daily returns or price. Since the actual investment returns on holding a position in litecoin crypto coin tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in Litecoin.

Litecoin Crypto Coin Volatility Analysis

Volatility refers to the frequency at which Litecoin crypto price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with Litecoin's price changes. Investors will then calculate the volatility of Litecoin's crypto coin to predict their future moves. A crypto that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A crypto coin with relatively stable price changes has low volatility. A highly volatile crypto is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of Litecoin's volatility:

Historical Volatility

This type of crypto volatility measures Litecoin's fluctuations based on previous trends. It's commonly used to predict Litecoin's future behavior based on its past. However, it cannot conclusively determine the future direction of the crypto coin.

Implied Volatility

This type of volatility provides a positive outlook on future price fluctuations for Litecoin's current market price. This means that the crypto will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on Litecoin's to be redeemed at a future date.
Transformation
The output start index for this execution was zero with a total number of output elements of sixty-one. The Median Price line plots median indexes of Litecoin price series.
.

Litecoin Projected Return Density Against Market

Assuming the 90 days trading horizon Litecoin has a beta of -0.4018 . This indicates as returns on benchmark increase, returns on holding Litecoin are expected to decrease at a much lower rate. During the bear market, however, Litecoin is likely to outperform the market.
Most traded cryptocurrencies are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or coin-specific or project-specific) risk. Unsystematic risk is the risk that events specific to Litecoin project will adversely affect the coin's price. This type of risk can be diversified away by owning several different digital assets on different exchanges whose coin prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Litecoin's price will be affected by overall cryptocurrency market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Litecoin crypto's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
The company has an alpha of 0.5421, implying that it can generate a 0.54 percent excess return over NYSE Composite after adjusting for the inherited market risk (beta).
   Predicted Return Density   
       Returns  
Litecoin's volatility of a cryptocurrency is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how litecoin crypto coin's price will differ from the historical average after some time. There is a big difference when you buy Litecoin from a government-approved cryptocurrency exchange like Coinbase or a marketplace managed by a foreign entity. Using a local, USA-based marketplace will be less exposed to price manipulation. However, just like with stock markets, cryptocurrencies fluctuate because it is influenced by constant media hype, basic supply and demand laws, investor sentiments, and government regulations. These factors work together to add to Litecoin's price volatility.

Litecoin Crypto Coin Risk Measures

Most traded cryptocurrencies are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or coin-specific or project-specific) risk. Unsystematic risk is the risk that events specific to Litecoin project will adversely affect the coin's price. This type of risk can be diversified away by owning several different digital assets on different exchanges whose coin prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Litecoin's price will be affected by overall cryptocurrency market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Litecoin crypto's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision. Assuming the 90 days trading horizon the coefficient of variation of Litecoin is 916.8. The daily returns are distributed with a variance of 28.81 and standard deviation of 5.37. The mean deviation of Litecoin is currently at 3.56. For similar time horizon, the selected benchmark (NYSE Composite) has volatility of 1.
α
Alpha over NYSE Composite
0.54
β
Beta against NYSE Composite-0.4
σ
Overall volatility
5.37
Ir
Information ratio 0.07

Litecoin Crypto Coin Return Volatility

Litecoin historical daily return volatility represents how much of Litecoin crypto's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. Keep in mind that cryptocurrencies such as Litecoin have only been around for a short time and are still in the price discovery phase. This means that prices will continue to change as investors and governments work through the initial concerns until prices stabilize, provided a stable point can be reached. Litecoin assumes 5.3671% volatility of returns over the 90 days investment horizon. By contrast, NYSE Composite accepts 12.6051% volatility on return distribution over the 90 days horizon.
 Performance (%) 
       Timeline  

About Litecoin Volatility

Volatility is a rate at which the price of Litecoin or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Litecoin may increase or decrease. In other words, similar to Litecoin's beta indicator, it measures the risk of Litecoin and helps estimate the fluctuations that may happen in a short period of time. So if prices of Litecoin fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

Litecoin Investment Opportunity

NYSE Composite has a standard deviation of returns of 12.61 and is 2.35 times more volatile than Litecoin. 46  of all equities and portfolios are less risky than Litecoin. Compared to the overall equity markets, volatility of historical daily returns of Litecoin is lower than 46 () of all global equities and portfolios over the last 90 days. Use Litecoin to protect your portfolios against small market fluctuations. Benchmarks are essential to demonstrate the utility of optimization algorithms. The crypto coin experiences a somewhat bearish sentiment, but the market may correct it shortly. Check odds of Litecoin to be traded at $74.17 in 90 days.

Good diversification

The correlation between Litecoin and NYA is -0.11 (i.e., Good diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Litecoin and NYA in the same portfolio, assuming nothing else is changed. Please note that Litecoin is a digital instrument and cryptocurrency exchanges were notoriously volatile since the beginning of their establishment.

Litecoin Additional Risk Indicators

The analysis of Litecoin's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Litecoin's investment and either accepting that risk or mitigating it. Along with some common measures of Litecoin crypto coin's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential crypto coins, we recommend comparing similar cryptos with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

Litecoin Suggested Diversification Pairs

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Litecoin as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Litecoin's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Litecoin's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Litecoin.
Additionally, see Correlation Analysis. You can also try Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

Other Tools for Litecoin Crypto Coin

When running Litecoin price analysis, check to measure Litecoin's coin volatility and technical momentum indicators. We have many different tools that can be utilized to determine how healthy Litecoin is operating at the current time. Most of Litecoin's value examination focuses on studying past and present price actions to predict the probability of Litecoin's future price movements. You can analyze the coin against its peers and the financial market as a whole to determine factors that move Litecoin's coin price. Additionally, you may evaluate how adding Litecoin to your portfolios can decrease your overall portfolio volatility.
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