Return of investments isnt complete without including risk rate.
For example, if you gamble at casino, and have 50% chances to win 2x returns, your return of investment is 0.
50% = One case when you win, you gain 100. When you lose, you lose 100. Average of that is zero.
So return of investments in gambling is in ideal case 0. tho in casino, there is even additional loss because house takes the cut.
Return of investments are simply calculated by 3 values:
Investment, gains when investment is successful, and risk rate.
Investment is a loss in all cases.
gains when investment is successful is just how much you expect to get in case investment doesnt fail
Risk rate is in how many out of 10 cases does your investment fail.
So lets say something has 50% failure rate, but 3x gains if successful.
Because it has 50% failure rate, we can assume it succeeds half the time, thus only need 2 cases, one success, one failure, of equal probability each.
So in one case, if you invest 100, when you lose, you lose 100.
But when you succeed, you gain 200.
In these two cases, you invested 200 total, but gained 300. So ROI is 100 profit on average.
If something has 25% success rate, you need 4 cases.
Lets say something has 25% success rate, but 5x gains
You invest 100. Because there are 4 cases, you lose 400. But in case where you succeed, you gain 500. ROI is 100 profit.
to make calculation very simple, all you need is this:
If 75% success rate, gains need to be more than 1.4x.
If 50% success rate, gains need to be more than 2x.
If 25% success rate, gains need to be more than 4x.
If 10% success rate, gains need to be more than 10x
Because its: number 100 divided by success rate.
If success rate is 25%, then 100/25 = 4, so gains from success need to be above 4x.
this makes it easy to calculate ROI. All you need to know is risk rate (success rate), and gains from success.