Bitcoin Risk Diversification Analysis
Overview
This project explores the role of Bitcoin in portfolio diversification through the lens of Modern Portfolio Theory (MPT). As cryptocurrencies emerged as an increasingly important asset class, the project investigates whether Bitcoin can improve portfolio performance while balancing investment risk.
The work reflects my early interest in quantitative finance, portfolio optimization, and statistical approaches to investment decision making.
Motivation
The rapid growth of cryptocurrency markets introduced new opportunities and challenges for investors. While Bitcoin offers significant return potential, its high volatility raises important questions regarding portfolio allocation and risk management.
This project examines whether Bitcoin can provide meaningful diversification benefits when incorporated into traditional investment portfolios.
Methodology
The study applies Modern Portfolio Theory (MPT) to evaluate the impact of Bitcoin on portfolio construction using historical market data. Statistical analysis was performed to compare portfolio risk and expected return under different allocation strategies while examining key sources of cryptocurrency risk, including market volatility and regulatory uncertainty.
Outcome
This project represents one of my early explorations in quantitative finance and reflects the analytical foundation that later expanded into statistics, machine learning, and artificial intelligence research.
Key Topics
- Quantitative Finance
- Modern Portfolio Theory
- Portfolio Optimization
- Bitcoin
- Risk Diversification
- Statistical Analysis