Navigating Investment Options: Risk-Return Assessment of Cryptocurrencies, Gold, and Exchange Rates

Abstract

This paper assesses the risk-return profiles of cryptocurrencies (Bitcoin and Ethereum), gold, and exchange rates (USD/INR, EUR/INR) to determine their attractiveness as investment options. Using data spans the last five years, from January 2019 to December 2023.weanalyze simple returns, volatility, and the Sharpe ratio for each asset class. Our findings reveal significant differences in risk and return characteristics, highlighting the diverse investment opportunities these assets offer. Bitcoin and Ethereum exhibit high returns but with substantial volatility, making them suitable for high-risk tolerance investors. Gold provides stable returns with lower volatility, serving as a safe-haven asset. Exchange rates offer moderate risk and returns, ideal for investors seeking currency exposure and diversification. This comparative analysis aims to guide investors in optimizing their portfolios based on individual risk preferences and investment goals.