Rating System Validation Study
Proving the Predictive Power of CoinRoc's Cryptocurrency Ratings
Executive Summary
This study validates the effectiveness of CoinRoc's cryptocurrency rating system for identifying successful grid trading candidates. Using a rigorous blind forward test methodology across 60 cryptocurrencies, we demonstrate that our rating system achieves 100% accuracy for B-rated and above cryptocurrencies.
Methodology: Blind Forward Testing
To ensure realistic performance expectations, we use a strict blind forward test methodology that prevents any look-ahead bias.
Year 1: Parameter Calculation
Days 1-360 of historical data
- Calculate grid parameters (upper/lower limits)
- Compute all rating factors (ETS, Calmar, Sortino, etc.)
- Generate composite rating (A+ to D)
- NO access to Year 2 data
Year 2: Performance Measurement
Days 361-720 of historical data
- Trade using ONLY Year 1 parameters
- No parameter adjustments allowed
- Measure actual grid trading returns
- Compare to Year 1 ratings
Why this matters: Traditional backtesting often "peeks" at future data when setting parameters, leading to overly optimistic results. Our blind forward test gives you realistic expectations of what to expect from the rating system.
The Seven Rating Factors
Our rating system combines seven factors, weighted based on their predictive power:
| Factor | Weight | What It Measures |
|---|---|---|
| Grid Return | 35% | Historical profit from grid simulation |
| Sortino Ratio | 20% | Return per unit of downside risk only |
| Calmar Ratio | 15% | Return divided by max drawdown |
| CS-Score (Sentiment) | 10% | Social media sentiment indicator |
| Alpha | 10% | Excess return vs. risk level |
| ETS Score | 5% | Grid trading suitability (volatility patterns) |
| Liquidity | 5% | Trading volume and market depth |
Results by Grade
| Grade | Count | Avg Return | Win Rate | Recommendation |
|---|---|---|---|---|
A | 1 | +38.1% | 100% | Strong Buy |
B | 9 | +17.8% | 100% | Buy |
C | 37 | +2.3% | 57% | Caution |
D | 12 | -12.2% | 8% | Avoid |
Key Finding: Every single cryptocurrency rated B- or above was profitable in Year 2.
Top 10 Performers (Selected by Year 1 Rating)
| Rank | Crypto | Year 2 Return | Key Strengths |
|---|---|---|---|
| 1 | CAKE | +159.0% | Exceptional grid return + strong Sortino |
| 2 | BCH | +96.9% | High returns + excellent Calmar ratio |
| 3 | ZEC | +90.9% | Strong Sortino + balanced risk metrics |
| 4 | NMR | +59.4% | High alpha + good downside protection |
| 5 | LTC | +55.7% | Consistent performer + strong liquidity |
| 6 | ATOM | +48.2% | Good Sortino + favorable volatility |
| 7 | INJ | +47.5% | Strong grid return + high alpha |
| 8 | DOGE | +35.0% | Neutral sentiment + good Calmar |
| 9 | LINK | +27.9% | Balanced scores across all factors |
| 10 | BTC | +20.4% | Baseline performer + excellent liquidity |
Top 5 Portfolio Average: +92.4% vs Buy & Hold average of +40.3%
Grid Trading vs Buy & Hold
Top 5 Portfolio
Top 10 Portfolio
Conclusion
Our rating system demonstrates strong predictive power for identifying successful grid trading candidates. Key findings:
- 0.886 correlation between Year 1 ratings and Year 2 performance
- 100% win rate for B-rated and above cryptocurrencies
- +52.1% outperformance vs buy & hold for top 5 rated assets
- Sortino ratio improved predictions by 3.6% over previous model
See the Ratings in Action
Explore our Discovery page to see current ratings for 60+ cryptocurrencies.