A variation of the Sharpe Ratio that only penalizes downside volatility instead of overall volatility. The Sortino Ratio is calculated by dividing the strategy’s excess return by its downside deviation (the standard deviation of negative asset returns). In backtesting, the Sortino Ratio provides a risk-adjusted return metric that focuses on harmful volatility (losses) and ignores upside volatility. A higher Sortino is better, indicating the strategy achieves good returns with relatively low frequency or magnitude of drawdowns. This is particularly useful for strategies aiming to minimize losses, as it gives a clearer picture of performance during adverse conditions

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