Optimal Transaction Model Based on Venture Capital

Abstract

Market is full of volatile assets, making traders dazzling when investing and forming portfolios. Surely, even the most intelligent one can fall head over heels when facing rug-pull. However, the goal to maximize total return is possible if a best strategy is made. Instead of invest blindly and behave impulsively and help the trader to achieve his goal, we preprocess the prices of gold and bitcoin, build three models to achieve the best balance between risk and return. With the help of MA calculations and through rotating test, we come to our conclusion that Bitcoin is not strongly correlated with gold and can be hedged against risk and is more volatile and suitable for short-term holdings while gold should be made into long-term investment and avoid frequent trading. With the help of optimal portfolio theory, we build our model and test the best proportion of gold and bitcoin when selling and buying.