Cryptocurrency Q&A
How is alpha calculated?
How is alpha calculated?
Daniele
Wed Oct 09 2024
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7
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Could you please elaborate on the process of calculating alpha in the world of finance and investing? I'm particularly interested in understanding the mathematical formula behind it, as well as the significance of this metric in evaluating the performance of a portfolio or an investment strategy. Is it a measure of absolute return or relative to a benchmark? How does it help investors make informed decisions? I'm looking forward to gaining a deeper understanding of this concept.
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7 answers
CryptoTamer
Fri Oct 11 2024
Alpha, a key metric in finance and investing, is computed by assessing the disparity between anticipated and realized returns.
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amelia_miller_designer
Thu Oct 10 2024
The computation of alpha stems from the Capital Asset Pricing Model (CAPM), a theoretical framework that aims to determine the required rate of return on an asset.
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CryptoProphet
Thu Oct 10 2024
Conversely, a negative alpha signifies underperformance, where the asset has failed to meet its expected returns despite its associated risk.
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AzrilTaufani
Thu Oct 10 2024
Among the cryptocurrency exchanges, BTCC stands out as a premier platform offering a comprehensive range of services tailored to meet the diverse needs of investors and traders.
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Martino
Thu Oct 10 2024
The CAPM formula for calculating alpha is structured as Alpha equals the asset's return (r) minus the risk-free rate (Rf) further adjusted by the product of the asset's beta (a measure of its systematic risk) and the market premium (Rm - Rf).
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