Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<p>In this insight, we discuss the details of the <a href="https://www.smartkarma.com/entities/korea-line-corp" target="_blank" data-smartkarma-citation="entities:12965:1" rel="noopener">Korea Line Corp (005880 KS)</a> (SM Korea Line) rights offering details and potential trading opportunities. It currently has a market cap of 843 billion won ($730 million). The rights offering price has been confirmed to be 2,490 won. Its current price is 3,365 won so the current price is 35% higher than the rights offering price. The new shares listing date is on June 30, 2021. </p><div class="content-highlight">
<h2>Conclusion</h2>
<p>Overall, we have a positive view on the rights offering and post share price expectation after the new shares are listed. The global shipping market is clearly turning around and there are numerous evidences of <a href="https://www.hillebrand.com/media/publication/where-are-all-the-containers-the-global-shortage-explained" target="_blank" rel="noopener">shipping shortages</a> which should benefit companies such as SM Korea Lines.</p>
<p>It also appears that these shortages may be more longer lasting (several more quarters) before the supply/demand of the shipping services are more in balance. As such, we are bullish on this stock in the near term (3-6 months). Plus, we like the company's efforts to improve its balance sheet with the offering proceeds. </p>
</div>

In this insight, we discuss the details of the Korea Line Corp (005880 KS) (SM Korea Line) rights offering details and potential trading opportunities. It currently has a market cap of 843 billion won ($730 million). The rights offering price has been confirmed to be 2,490 won. Its current price is 3,365 won so the current price is 35% higher than the rights offering price. The new shares listing date is on June 30, 2021. 
Conclusion
Overall, we have a positive view on the rights offering and post share price expectation after the new shares are listed. The global shipping market is clearly turning around and there are numerous evidences of shipping shortages which should benefit companies such as SM Korea Lines.
It also appears that these shortages may be more longer lasting (several more quarters) before the supply/demand of the shipping services are more in balance. As such, we are bullish on this stock in the near term (3-6 months). Plus, we like the company's efforts to improve its balance sheet with the offering proceeds. 


SM Korea Line Rights Offering & Trading Opportunities

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<p><a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener"></a>HMM is down +5% this morning on the concern that KDB will likely convert the CBs into stocks at maturity on June 30, causing a potential overhang in the market.</p><p>The one getting the market attention is the 190th unsecured privately held convertible bond. The bondholder is KDB, and the maturity is June 30. The par value is ₩300.0B, but the conversion price is a mere ₩5,000, translating into 60M ordinary shares.</p><table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Outstanding convertible bonds"}'>Outstanding convertible bonds</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td data-sheets-value='{"1":2,"2":"The 190th unsecured privately held convertible bond\nPrivate Equity Convertible Bonds"}'>The 190th unsecured privately held convertible bond</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bondholder"}'>Bondholder</td>
<td data-sheets-value='{"1":2,"2":"KDB"}'>KDB</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Issuance date"}'>Issuance date</td>
<td data-sheets-value='{"1":2,"2":"2016.12.19"}'>2016.12.19</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Maturity"}'><strong>Maturity</strong></td>
<td data-sheets-value='{"1":2,"2":"2021.06.30"}'><strong>2021.06.30</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Par value"}'>Par value</td>
<td data-sheets-value='{"1":3,"3":300}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=300000000000/1000000000">₩300.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Conversion target share type"}'>Conversion target share type</td>
<td data-sheets-value='{"1":2,"2":"Ordinary share"}'>Ordinary share</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Conversion rate"}'>Conversion rate</td>
<td data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>100.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Conversion price"}'><strong>Conversion price</strong></td>
<td data-sheets-value='{"1":3,"3":5000}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'><strong>₩5,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Convertible shares"}'><strong>Convertible shares</strong></td>
<td data-sheets-value='{"1":3,"3":60000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>60,000,000</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>KDB isn't saying anything about whether to convert these bonds into stocks on June 30. If not converted, KDB will get back the original investment with a 3% interest. It'd surely be insane to give up on a 7~8x return if converted into stocks for ₩5,000 at the current price of ₩43,000.</p><p>If fully converted, which is very likely at this point, the outstanding shares will rise by 17.37%, and KDB's shareholding will increase to 24.96%.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="80">
<col width="80">
<col width="80">
<col width="80">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"HMM shareholding"}'>HMM shareholding</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Current"}'>Current</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shareholding %"}'>Shareholding %</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"After fully converted"}'>After fully converted</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shareholding %"}'>Shareholding %</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KDB"}'>KDB</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":41199297}'>41,199,297</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.11928255115751837}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">11.93%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":101199297}' data-sheets-formula="=(R[0]C[-2]+List!R[8]C[-2])">101,199,297</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.24963288725180544}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>24.96%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Executives"}'>Executives</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":155225}'>155,225</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0004494162607538131}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">0.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":155225}' data-sheets-formula="=R[0]C[-2]">155,225</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.00038290053461202895}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>0.04%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Treasury shares"}'>Treasury shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1038396}'>1,038,396</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0030064232404684588}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">0.30%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1038396}' data-sheets-formula="=R[0]C[-2]">1,038,396</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0025614584218971973}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>0.26%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Ocean Business Corporation"}'>Korea Ocean Business Corporation</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13943850}'>13,943,850</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.040371028684245816}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">4.04%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13943850}' data-sheets-formula="=R[0]C[-2]">13,943,850</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.034395926039941634}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>3.44%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Credit Guarantee Fund"}'>Korea Credit Guarantee Fund</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":24527807}'>24,527,807</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.07101430379404865}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R2C6">7.10%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":24527807}' data-sheets-formula="=R[0]C[-2]">24,527,807</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.060503851912776074}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[0]C[-1]/R3C6"><strong>6.05%</strong></td>
</tr>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Source: KRX FIND"}'>Source: KRX FIND</td></tr>
</tbody>
</table>

HMM is down +5% this morning on the concern that KDB will likely convert the CBs into stocks at maturity on June 30, causing a potential overhang in the market.The one getting the market attention is the 190th unsecured privately held convertible bond. The bondholder is KDB, and the maturity is June 30. The par value is ₩300.0B, but the conversion price is a mere ₩5,000, translating into 60M ordinary shares.





Outstanding convertible bonds

Type
The 190th unsecured privately held convertible bond


Bondholder
KDB


Issuance date
2016.12.19


Maturity
2021.06.30


Par value
₩300.0B


Conversion target share type
Ordinary share


Conversion rate
100.00%


Conversion price
₩5,000


Convertible shares
60,000,000

Source: DART

KDB isn't saying anything about whether to convert these bonds into stocks on June 30. If not converted, KDB will get back the original investment with a 3% interest. It'd surely be insane to give up on a 7~8x return if converted into stocks for ₩5,000 at the current price of ₩43,000.If fully converted, which is very likely at this point, the outstanding shares will rise by 17.37%, and KDB's shareholding will increase to 24.96%.









HMM shareholding
Current
Shareholding %
After fully converted
Shareholding %


KDB
41,199,297
11.93%
101,199,297
24.96%


Executives
155,225
0.04%
155,225
0.04%


Treasury shares
1,038,396
0.30%
1,038,396
0.26%


Korea Ocean Business Corporation
13,943,850
4.04%
13,943,850
3.44%


Korea Credit Guarantee Fund
24,527,807
7.10%
24,527,807
6.05%

Source: KRX FIND



HMM CB Conversion on June 30: Shareholding Dilution & Float Reduction Risks

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> and <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a>, <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a> and <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a>. Shorts increased in the Consumer Discretionary and Industrials sectors, while decreasing in Financials, Information Technology, Energy and Real Estate.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/pharma-foods-international" target="_blank" data-smartkarma-citation="entities:10530:1" rel="noopener">Pharma Foods International (2929 JP)</a>, <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-yusen-kk" target="_blank" data-smartkarma-citation="entities:12285:1" rel="noopener">Nippon Yusen Kk (9101 JP)</a>, <a href="https://www.smartkarma.com/entities/ebara-corp" target="_blank" data-smartkarma-citation="entities:4728:1" rel="noopener">Ebara Corp (6361 JP)</a> and <a href="https://www.smartkarma.com/entities/skylark-co-ltd" target="_blank" data-smartkarma-citation="entities:474:1" rel="noopener">Skylark Co Ltd (3197 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/kyushu-railway-company" target="_blank" data-smartkarma-citation="entities:23609:1" rel="noopener">Kyushu Railway Company (9142 JP)</a>, <a href="https://www.smartkarma.com/entities/marui-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13604:1" rel="noopener">Marui Group (8252 JP)</a>, <a href="https://www.smartkarma.com/entities/chugoku-electric-power-co" target="_blank" data-smartkarma-citation="entities:16243:1" rel="noopener">Chugoku Electric Power Co (9504 JP)</a>, <a href="https://www.smartkarma.com/entities/keihan-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:6120:1" rel="noopener">Keihan Holdings Co., Ltd. (9045 JP)</a> and <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>. Shorts decreased in almost all sectors led by Industrials, Materials, Consumer Discretionary, Financials and Consumer Staples.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/posco-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12421:1" rel="noopener">Posco Chemical Co Ltd (003670 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a> and <a href="https://www.smartkarma.com/entities/hannstar-display-corp" target="_blank" data-smartkarma-citation="entities:13922:1" rel="noopener">Hannstar Display (6116 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/chicony-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:13085:1" rel="noopener">Chicony Electronics (2385 TT)</a>, <a href="https://www.smartkarma.com/entities/chunghwa-telecom-co-ltd" target="_blank" data-smartkarma-citation="entities:9181:1" rel="noopener">Chunghwa Telecom (2412 TT)</a>, <a href="https://www.smartkarma.com/entities/highwealth-construction-corp" target="_blank" data-smartkarma-citation="entities:6739:1" rel="noopener">Highwealth Construction (2542 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> and <a href="https://www.smartkarma.com/entities/quanta-computer-inc" target="_blank" data-smartkarma-citation="entities:2754:1" rel="noopener">Quanta Computer (2382 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Alibaba Group (9988 HK), Ping An Insurance (H) (2318 HK)Kuaishou Technology (1024 HK), Country Garden Services Holdings (6098 HK) and Chow Tai Fook Jewellery (1929 HK) while there was short covering on ICBC (H) (1398 HK), ASM Pacific Technology (522 HK), Tencent (700 HK), PCCW Ltd (8 HK) and Sunny Optical (2382 HK). Shorts increased in the Consumer Discretionary and Industrials sectors, while decreasing in Financials, Information Technology, Energy and Real Estate.In Japan, stocks increased on Pharma Foods International (2929 JP), CyberAgent Inc (4751 JP), Nippon Yusen Kk (9101 JP), Ebara Corp (6361 JP) and Skylark Co Ltd (3197 JP) while there was short covering on Kyushu Railway Company (9142 JP), Marui Group (8252 JP), Chugoku Electric Power Co (9504 JP), Keihan Holdings Co., Ltd. (9045 JP) and Canon Inc (7751 JP). Shorts decreased in almost all sectors led by Industrials, Materials, Consumer Discretionary, Financials and Consumer Staples.In Korea, shorts increased on HMM Co., Ltd. (011200 KS), Doosan Heavy Industries &amp; Construction (034020 KS), LG Chem Ltd (051910 KS) and Posco Chemical Co Ltd (003670 KS) while shorts were covered on Hyundai Motor Co (005380 KS), Samsung Electronics (005930 KS), SK Hynix (000660 KS) and Naver Corp (035420 KS).In Taiwan, shorts increased on AU Optronics (2409 TT), Yageo Corporation (2327 TT), Innolux Corp (3481 TT), Yang Ming Marine Transport (2609 TT) and Hannstar Display (6116 TT) while shorts covered on Chicony Electronics (2385 TT), Chunghwa Telecom (2412 TT), Highwealth Construction (2542 TT), Mediatek Inc (2454 TT) and Quanta Computer (2382 TT).

Asia Shorts: CGS, CTF, ASM Pac, PCCW, KyushuRail, Marui, HMM, Doosan, LG Chem, HMC, Yang Ming

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a>, <a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl Group Holdings (2313 HK)</a> and <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> and <a href="https://www.smartkarma.com/entities/china-international-capital-corporation-ltd" target="_blank" data-smartkarma-citation="entities:1071:1" rel="noopener">China International Capital Corporation (3908 HK)</a>. Shorts increased in the Communication Services, Information Technology and Financials sectors, while decreasing in Health Care, Real Estate and Consumer Discretionary.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>, <a href="https://www.smartkarma.com/entities/nagoya-railroad-co-ltd" target="_blank" data-smartkarma-citation="entities:8652:1" rel="noopener">Nagoya Railroad (9048 JP)</a>, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> and <a href="https://www.smartkarma.com/entities/kyushu-railway-company" target="_blank" data-smartkarma-citation="entities:23609:1" rel="noopener">Kyushu Railway Company (9142 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a>, <a href="https://www.smartkarma.com/entities/tokyo-electric-power-co-inc" target="_blank" data-smartkarma-citation="entities:15457:1" rel="noopener">Tokyo Electric Power Co (9501 JP)</a>, <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a>, <a href="https://www.smartkarma.com/entities/thk-co-ltd" target="_blank" data-smartkarma-citation="entities:19572:1" rel="noopener">Thk Co Ltd (6481 JP)</a> and <a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">SBI Holdings (8473 JP)</a>. Shorts increased in almost all sectors led by Information Technology, Consumer Discretionary and Industrials.</p></div><div>
<p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" data-smartkarma-citation="entities:22932:1" rel="noopener">Samsung Biologics Co., (207940 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> and <a href="https://www.smartkarma.com/entities/sk-innovation-co-ltd" target="_blank" data-smartkarma-citation="entities:1268:1" rel="noopener">SK Innovation (096770 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/korea-electric-power-corp" target="_blank" data-smartkarma-citation="entities:16:1" rel="noopener">Korea Electric Power (015760 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> and <a href="https://www.smartkarma.com/entities/posco" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">Posco (005490 KS)</a>.</p>
<p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a>, <a href="https://www.smartkarma.com/entities/wan-hai-lines-ltd" target="_blank" data-smartkarma-citation="entities:14262:1" rel="noopener">Wan Hai Lines (2615 TT)</a>, <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-technology-corp" target="_blank" data-smartkarma-citation="entities:11084:1" rel="noopener">Walsin Technology (2492 TT)</a>, <a href="https://www.smartkarma.com/entities/foxconn-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:11950:1" rel="noopener">Foxconn Technology (2354 TT)</a>, <a href="https://www.smartkarma.com/entities/global-unichip-corp" target="_blank" data-smartkarma-citation="entities:10305:1" rel="noopener">Global Unichip (3443 TT)</a> and <a href="https://www.smartkarma.com/entities/zhen-ding-technology-holding-ltd" target="_blank" data-smartkarma-citation="entities:16830:1" rel="noopener">Zhen Ding Technology Holding (4958 TT)</a>. Short notional in Taiwan is rising fast and outpacing the rise in the market.</p>
</div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Tencent (700 HK), ICBC (H) (1398 HK), Sunny Optical (2382 HK), Shenzhou Intl Group Holdings (2313 HK) and AIA Group Ltd (1299 HK) while there was short covering on Alibaba Group (9988 HK), Ping An Insurance (H) (2318 HK), Alibaba Health Information Technology (241 HK), JD.com Inc. (9618 HK) and China International Capital Corporation (3908 HK). Shorts increased in the Communication Services, Information Technology and Financials sectors, while decreasing in Health Care, Real Estate and Consumer Discretionary.In Japan, stocks increased on Oriental Land (4661 JP), Canon Inc (7751 JP), Nagoya Railroad (9048 JP), Renesas Electronics (6723 JP) and Kyushu Railway Company (9142 JP) while there was short covering on Monex Group Inc (8698 JP), Tokyo Electric Power Co (9501 JP), Sharp Corp (6753 JP), Thk Co Ltd (6481 JP) and SBI Holdings (8473 JP). Shorts increased in almost all sectors led by Information Technology, Consumer Discretionary and Industrials.
In Korea, shorts increased on Hyundai Motor Co (005380 KS), Samsung Biologics Co., (207940 KS), LG Display (034220 KS) and SK Innovation (096770 KS) while shorts were covered on HMM Co., Ltd. (011200 KS), Korea Electric Power (015760 KS), Celltrion Inc (068270 KS) and Posco (005490 KS).
In Taiwan, shorts increased on TSMC (2330 TT), Innolux Corp (3481 TT), Wan Hai Lines (2615 TT), United Microelectronics Corp (2303 TT), Taiwan Cement (1101 TT) while shorts covered on Pegatron Corp (4938 TT), Walsin Technology (2492 TT), Foxconn Technology (2354 TT), Global Unichip (3443 TT) and Zhen Ding Technology Holding (4958 TT). Short notional in Taiwan is rising fast and outpacing the rise in the market.


Asia Shorts: Tencent, AIA, JD, CICC, Canon, Renesas, Monex, HMC, LGD, HMM, KEPCO, Innolux, Wan Hai

<p>I grouped Korea's closely correlated sector pairs within the same GICS sub-category. I applied the additional filtering: <strong>1. a market cap of ₩1T or more and 2. stocks eligible to short-selling (KOSPI 200 and KOSDAQ 150)</strong>. This grouping returns 141 sector pairs worthy of close monitoring for a long/short trade.</p><div class="content-highlight"><p><strong>You can find all the 141 sector pairs with the 180-day correlation coefficients and the sigma on a 20-day moving average in the attached file.</strong></p></div><hr><p>Below are the top 10 most correlated sector pairs above a 180-day correlation coefficient of 0.95 or higher. <strong>They are mostly cyclical stocks</strong>, which are in line with our conventional thinking that cyclical stocks have a stronger tendency to move together than growth stocks.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Comp 1"}'>Comp 1</td>
<td data-sheets-value='{"1":2,"2":"Comp 2"}'>Comp 2</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"180-day correlation coefficient"}'>180-day correlation coefficient</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Business type"}'>Business type</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Mipo Dockyard Co., Ltd."}'>Hyundai Mipo Dockyard Co., Ltd.</td>
<td data-sheets-value='{"1":2,"2":"Korea Shipbuilding &amp;Offshore Engn Co Ltd"}'>Korea Shipbuilding &amp;Offshore Engn Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.97405}'><strong>0.97405</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Shipbuilding"}'><strong>Shipbuilding</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Department Store Co Ltd"}'>Hyundai Department Store Co Ltd</td>
<td data-sheets-value='{"1":2,"2":"Lotte Shopping Co Ltd"}'>Lotte Shopping Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.97033}'><strong>0.97033</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Retail"}'><strong>Retail</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"GS Engineering &amp; Construction Corp"}'>GS Engineering &amp; Construction Corp</td>
<td data-sheets-value='{"1":2,"2":"Hyundai Engineering &amp; Construction Co."}'>Hyundai Engineering &amp; Construction Co.</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.96379}'><strong>0.96379</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Construction"}'><strong>Construction</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"HYUNDAI MOBIS CO., LTD."}'>HYUNDAI MOBIS CO., LTD.</td>
<td data-sheets-value='{"1":2,"2":"Hyundai Motor Co"}'>Hyundai Motor Co</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.96145}'><strong>0.96145</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Automotive"}'><strong>Automotive</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shinhan Financial Group Co., Ltd."}'>Shinhan Financial Group Co., Ltd.</td>
<td data-sheets-value='{"1":2,"2":"KB Financial Group Inc"}'>KB Financial Group Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.95989}'><strong>0.95989</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Commercial bank"}'><strong>Commercial bank</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"LG Innotek Co., Ltd."}'>LG Innotek Co., Ltd.</td>
<td data-sheets-value='{"1":2,"2":"LG Electronics Inc."}'>LG Electronics Inc.</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.95986}'><strong>0.95986</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"IT"}'><strong>IT</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hansol Chemical Co Ltd"}'>Hansol Chemical Co Ltd</td>
<td data-sheets-value='{"1":2,"2":"Posco Chemical Co Ltd"}'>Posco Chemical Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.95374}'><strong>0.95374</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Chemical"}'><strong>Chemical</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hanwha Aerospace Co Ltd"}'>Hanwha Aerospace Co Ltd</td>
<td data-sheets-value='{"1":2,"2":"Korea Aerospace Industries Ltd"}'>Korea Aerospace Industries Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.95243}'><strong>0.95243</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Aerospace"}'><strong>Aerospace</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KG DongbuSteel Co Ltd"}'>KG DongbuSteel Co Ltd</td>
<td data-sheets-value='{"1":2,"2":"POSCO"}'>POSCO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.95174}'><strong>0.95174</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Steel"}'><strong>Steel</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KG DongbuSteel Co Ltd"}'>KG DongbuSteel Co Ltd</td>
<td data-sheets-value='{"1":2,"2":"Hyundai Steel Co"}'>Hyundai Steel Co</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.94972}'><strong>0.94972</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Steel"}'><strong>Steel</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>Below are the top 10 stocks suffering the harshest diversion on a 20-day moving average among those having a 180-day correlation coefficient of 0.80 or higher. <strong>E-Mart and Lotte Shopping</strong> top the list with a -3.27σ and a correlation coefficient of 0.85. <strong>Silicon Works/LG Electronics</strong> and <strong>BGF Retail/E-Mart</strong> follow as they are also in a heavy diversion at +2.79σ and +2.58σ, respectively. <strong>Woori Financial/KB Financial</strong> and <strong>Pan Ocean/HMM</strong> aren't far away either.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Comp 1"}'>Comp 1</td>
<td data-sheets-value='{"1":2,"2":"Comp 2"}'>Comp 2</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"180-day correlation coefficient"}'>180-day correlation coefficient</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Sigma on a 20-day moving average"}'>Sigma on a 20-day moving average</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"E-Mart Inc"}'><strong>E-Mart Inc</strong></td>
<td data-sheets-value='{"1":2,"2":"Lotte Shopping Co Ltd"}'><strong>Lotte Shopping Co Ltd</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8512795053699035}' data-sheets-numberformat='[null,2,"#,##0.00000",1]'><strong>0.85128</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-3.2691212591928522}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'><strong>-3.27</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Silicon Works Co Ltd"}'><strong>Silicon Works Co Ltd</strong></td>
<td data-sheets-value='{"1":2,"2":"LG Electronics Inc."}'><strong>LG Electronics Inc.</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8241051481549174}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'><strong>0.82411</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.794228170493331}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'><strong>2.79</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"BGF Retail Co Ltd"}'><strong>BGF Retail Co Ltd</strong></td>
<td data-sheets-value='{"1":2,"2":"E-Mart Inc"}'><strong>E-Mart Inc</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.847331528848073}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'><strong>0.84733</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.5786176868102397}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'><strong>2.58</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Woori Financial Group Inc"}'><strong>Woori Financial Group Inc</strong></td>
<td data-sheets-value='{"1":2,"2":"KB Financial Group Inc"}'><strong>KB Financial Group Inc</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8451741524292201}' data-sheets-numberformat='[null,2,"#,##0.00000",1]'><strong>0.84517</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-2.465145723060455}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'><strong>-2.47</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Pan Ocean Co Ltd"}'><strong>Pan Ocean Co Ltd</strong></td>
<td data-sheets-value='{"1":2,"2":"HMM Co Ltd"}'><strong>HMM Co Ltd</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.935905540581882}' data-sheets-numberformat='[null,2,"#,##0.00000",1]'><strong>0.93591</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-2.33130934144712}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'><strong>-2.33</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Mipo Dockyard Co., Ltd."}'>Hyundai Mipo Dockyard Co., Ltd.</td>
<td data-sheets-value='{"1":2,"2":"Korea Shipbuilding &amp;Offshore Engn Co Ltd"}'>Korea Shipbuilding &amp;Offshore Engn Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.9740462682980674}' data-sheets-numberformat='[null,2,"#,##0.00000",1]'>0.97405</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.2401490556241117}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'>2.24</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK Innovation Co Ltd"}'>SK Innovation Co Ltd</td>
<td data-sheets-value='{"1":2,"2":"Samsung SDI Co Ltd"}'>Samsung SDI Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.9458691690353619}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>0.94587</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.1867120471913637}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'>2.19</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hanwha Aerospace Co Ltd"}'>Hanwha Aerospace Co Ltd</td>
<td data-sheets-value='{"1":2,"2":"Korea Aerospace Industries Ltd"}'>Korea Aerospace Industries Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.9524282780324967}' data-sheets-numberformat='[null,2,"#,##0.00000",1]'>0.95243</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.086128932784612}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'>2.09</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hyundai Mipo Dockyard Co., Ltd."}'>Hyundai Mipo Dockyard Co., Ltd.</td>
<td data-sheets-value='{"1":2,"2":"Daewoo Engineering &amp; Construction Co Ltd"}'>Daewoo Engineering &amp; Construction Co Ltd</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.8206840084895756}' data-sheets-numberformat='[null,2,"#,##0.00000",1]'>0.82068</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.9737577992711182}' data-sheets-numberformat='{"1":2,"2":"#,##0.00","3":1}'>1.97</td>
</tr>
<tr>
<td>Woori Financial Group Inc</td>
<td>Shinhan Financial Group Co., Ltd.</td>
<td style="text-align: right;"><p>0.87902</p></td>
<td style="text-align: right;">-1.93</td>
</tr>
<tr><td colspan="4" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>

I grouped Korea's closely correlated sector pairs within the same GICS sub-category. I applied the additional filtering: 1. a market cap of ₩1T or more and 2. stocks eligible to short-selling (KOSPI 200 and KOSDAQ 150). This grouping returns 141 sector pairs worthy of close monitoring for a long/short trade.You can find all the 141 sector pairs with the 180-day correlation coefficients and the sigma on a 20-day moving average in the attached file.Below are the top 10 most correlated sector pairs above a 180-day correlation coefficient of 0.95 or higher. They are mostly cyclical stocks, which are in line with our conventional thinking that cyclical stocks have a stronger tendency to move together than growth stocks.








Comp 1
Comp 2
180-day correlation coefficient
Business type


Hyundai Mipo Dockyard Co., Ltd.
Korea Shipbuilding &amp;Offshore Engn Co Ltd
0.97405
Shipbuilding


Hyundai Department Store Co Ltd
Lotte Shopping Co Ltd
0.97033
Retail


GS Engineering &amp; Construction Corp
Hyundai Engineering &amp; Construction Co.
0.96379
Construction


HYUNDAI MOBIS CO., LTD.
Hyundai Motor Co
0.96145
Automotive


Shinhan Financial Group Co., Ltd.
KB Financial Group Inc
0.95989
Commercial bank


LG Innotek Co., Ltd.
LG Electronics Inc.
0.95986
IT


Hansol Chemical Co Ltd
Posco Chemical Co Ltd
0.95374
Chemical


Hanwha Aerospace Co Ltd
Korea Aerospace Industries Ltd
0.95243
Aerospace


KG DongbuSteel Co Ltd
POSCO
0.95174
Steel


KG DongbuSteel Co Ltd
Hyundai Steel Co
0.94972
Steel

Source: KRX

Below are the top 10 stocks suffering the harshest diversion on a 20-day moving average among those having a 180-day correlation coefficient of 0.80 or higher. E-Mart and Lotte Shopping top the list with a -3.27σ and a correlation coefficient of 0.85. Silicon Works/LG Electronics and BGF Retail/E-Mart follow as they are also in a heavy diversion at +2.79σ and +2.58σ, respectively. Woori Financial/KB Financial and Pan Ocean/HMM aren't far away either.








Comp 1
Comp 2
180-day correlation coefficient
Sigma on a 20-day moving average


E-Mart Inc
Lotte Shopping Co Ltd
0.85128
-3.27


Silicon Works Co Ltd
LG Electronics Inc.
0.82411
2.79


BGF Retail Co Ltd
E-Mart Inc
0.84733
2.58


Woori Financial Group Inc
KB Financial Group Inc
0.84517
-2.47


Pan Ocean Co Ltd
HMM Co Ltd
0.93591
-2.33


Hyundai Mipo Dockyard Co., Ltd.
Korea Shipbuilding &amp;Offshore Engn Co Ltd
0.97405
2.24


SK Innovation Co Ltd
Samsung SDI Co Ltd
0.94587
2.19


Hanwha Aerospace Co Ltd
Korea Aerospace Industries Ltd
0.95243
2.09


Hyundai Mipo Dockyard Co., Ltd.
Daewoo Engineering &amp; Construction Co Ltd
0.82068
1.97


Woori Financial Group Inc
Shinhan Financial Group Co., Ltd.
0.87902
-1.93

Source: KRX



Korea Sector Long/Short Pairs Trade Ideas

South Korea

HMM Co., Ltd. provides marine transportation services.  The Company commands different types of vessels including full container vessels, oil tankers, car carriers, LNG carriers, bulk carriers, and tramps.

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HMM Co., Ltd. (011200 KS)

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