Correlation Between Chi Sheng and Fubon Financial

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Can any of the company-specific risk be diversified away by investing in both Chi Sheng and Fubon Financial 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 Chi Sheng and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Sheng Chemical and Fubon Financial Holding, you can compare the effects of market volatilities on Chi Sheng and Fubon Financial 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 Chi Sheng with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Sheng and Fubon Financial.

Diversification Opportunities for Chi Sheng and Fubon Financial

ChiFubonDiversified AwayChiFubonDiversified Away100%
0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Chi and Fubon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chi Sheng Chemical and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding and Chi Sheng 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 Chi Sheng Chemical are associated (or correlated) with Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Chi Sheng i.e., Chi Sheng and Fubon Financial go up and down completely randomly.

Pair Corralation between Chi Sheng and Fubon Financial

Assuming the 90 days trading horizon Chi Sheng Chemical is expected to generate 10.4 times more return on investment than Fubon Financial. However, Chi Sheng is 10.4 times more volatile than Fubon Financial Holding. It trades about 0.1 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.14 per unit of risk. If you would invest  2,635  in Chi Sheng Chemical on November 14, 2024 and sell it today you would earn a total of  190.00  from holding Chi Sheng Chemical or generate 7.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.25%
ValuesDaily Returns

Chi Sheng Chemical  vs.  Fubon Financial Holding

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0246810
JavaScript chart by amCharts 3.21.154111 2881A
       Timeline  
Chi Sheng Chemical 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Chi Sheng Chemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chi Sheng may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb26.52727.52828.52929.53030.5
Fubon Financial Holding 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Financial Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fubon Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb62.562.662.762.862.96363.163.263.363.4

Chi Sheng and Fubon Financial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.72-2.79-1.85-0.920.00.921.892.863.834.8 510152025
JavaScript chart by amCharts 3.21.154111 2881A
       Returns  

Pair Trading with Chi Sheng and Fubon Financial

The main advantage of trading using opposite Chi Sheng and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Sheng position performs unexpectedly, Fubon Financial 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 Fubon Financial will offset losses from the drop in Fubon Financial's long position.
The idea behind Chi Sheng Chemical and Fubon Financial Holding 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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