Correlation Between Central Securities and Bimini Capital

Can any of the company-specific risk be diversified away by investing in both Central Securities and Bimini Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Central Securities and Bimini Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Central Securities and Bimini Capital Management, you can compare the effects of market volatilities on Central Securities and Bimini Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Central Securities with a short position of Bimini Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Securities and Bimini Capital.

Diversification Opportunities for Central Securities and Bimini Capital

-0.4

Correlation Coefficient

Central Securities  Bimini Capital

Very good diversification

The 3 months correlation between Central and Bimini is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Central Securities and Bimini Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bimini Capital Management and Central Securities is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Central Securities are associated (or correlated) with Bimini Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bimini Capital Management has no effect on the direction of Central Securities i.e., Central Securities and Bimini Capital go up and down completely randomly.

Pair Corralation between Central Securities and Bimini Capital

Considering the 90-day investment horizon Central Securities is expected to generate 8.48 times less return on investment than Bimini Capital. But when comparing it to its historical volatility, Central Securities is 12.57 times less risky than Bimini Capital. It trades about 0.25 of its potential returns per unit of risk. Bimini Capital Management is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Bimini Capital Management on November 19, 2024 and sell it today you would earn a total of  13.00  from holding Bimini Capital Management or generate 14.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Central Securities  vs.  Bimini Capital Management

Central Securities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Securities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Central Securities is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bimini Capital Management

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bimini Capital Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Bimini Capital may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Central Securities and Bimini Capital

The main advantage of trading using opposite Central Securities and Bimini Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Securities position performs unexpectedly, Bimini Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bimini Capital will offset losses from the drop in Bimini Capital's long position.

The idea behind Central Securities and Bimini Capital Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.