Unlisted Shares vs Crypto.

Sam: Hey, Sam! How are you doing? 

Alex: Wassup, Alex! I am good.

Sam: Man! Don't ask. I missed out on the crypto bonanza, and those gen-z assets are delivering crazy returns! My old classmate turned a millionaire two weeks ago! 

Hey, ZoOmers! How is it going for you? Did you guys just lose over 40% on your holdings?  

Well! It is not about profit and loss; every asset class has been through a high rise and deep plunge phase. What matters is the frequency with which such events strike. And I guess that we all know the chart-topper in terms of high frequency - cryptos’. 

Moving forward, let's have a short comparison between our offering, Unlisted Shares, and Post-Baby Busters' arsenal, Cryptocurrencies. 

We are starting with risk. If you have been our follower for long enough, you will be aware of the risk in the Unlisted Shares segment, which we even think might be comparatively lower than the cryptos'. But let's not play around with words! Instead, take a look at the risk profile chart attached below. 


Furthermore, let's talk about the frequency and magnitude of fluctuations in volatility. 

Unlisted Shares have been less volatile than the global stock market indices, whereas the volatility charts of cryptocurrencies are going crazy. Take a look at bitcoins’ comparative volatility chart. 


Bitcoin is just a part of the game. The entire universe of cryptocurrencies is inherently volatile. As a factual representation of the argument, here is a line chart of the Crypto Volatility Index followed by representations of volatility in the Unlisted Shares segment. 


Volatility in Unlisted Shares. 

Diversification of a portfolio is a must, as it acts as a protective shield for an investor’s investment portfolio. However, for diversification, you need to have oppositely correlated asset classes. We'll talk about the required magnitude of correlation some other day. But before that, here is a chart with data on the correlation consisting of Bitcoin, traditional asset classes, and Unlisted Shares. 

What's remarkable about this graph is how low the correlation between Bitcoin and other asset classes is. The value of the correlation between Bitcoin and the S&P 500 is 0.14, indicating that having Bitcoin in one's portfolio can help smooth out the fluctuations of the stock market. Bitcoin has a moderately negative relationship with bonds; since bond prices share an inverse relationship with yields or interest rates, this means that bitcoin prices and interest rate fluctuations have a slight positive link. 

The negative link between Bitcoin and the dollar startled me the most. I expected a favorable link between Bitcoin and the dollar because it is a cryptocurrency, but that possibly isn't the case. Perhaps there is a prospective hedge against inflation with bitcoin to the degree that it is positively connected with increasing interest rates, which tend to capture predicted inflation, but the correlation isn't that significant.

Correlation in the context of Unlisted Shares can be comprehended by paying attention to Factor Research’s provided data comparing the correlation of unlisted shares of US returns to the S&P 500 between 1994 and 2019. The connection between annual reported unlisted shares IRRs and S&P 500 index returns is negative. 


Closing remarks. 

There is no denying that cryptocurrencies have a plethora of rag-to-riches stories in their bag, but all of it came at seriously high risk. It’s not like investments made in unlisted shares are safe; therefore, we emphasize the comparative benefits of unlisted shares over various cryptocurrencies. Furthermore, as mentioned in our previous articles on “How HNIs & UHNIs are Redefining Investment Strategies.” and social posts, there is a massive potential for Indian private companies to grow. Therefore, there will not be a better time to invest in unlisted shares of high-growth Indian private companies. 

Hurry up! Explore and be a part of the growth story of the Indian unlisted share market with Precize. Reserve your access to join the unlisted share bandwagon by clicking on the following link: https://www.precize.in/