In today’s briefing:
- Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread
- A Pair Trade of Hanwha Aerospace and Hanwha Ocean
Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread
- Local traders are targeting the spread between day and NXT’s after-hours, a classic arb play similar to what Japanese instos used when ATS first launched, now emerging in Korea.
- The gap persists because institutional flow on NXT is still minimal, with recent data showing instos accounting for just 1-2% of total turnover.
- NXT’s night session is seeing heavy retail flow, providing instos with the liquidity to trade. This creates a rare opportunity to capitalize on early inefficiencies before others catch on.
A Pair Trade of Hanwha Aerospace and Hanwha Ocean
- In this insight, we discuss a pair trade between Hanwha Aerospace (012450 KS) (go long) and Hanwha Ocean (042660 KS) (go short).
- Hanwha Ocean faces bigger overhang risk of KDB continuing to sell additional shares of the company as compared to Hanwha Aerospace’s rights offering shares dilution risk.
- Hanwha Aerospace/Hanwha Ocean price ratio (5 year period) is near the 2 standard deviation (STD) mark which could suggest a reversion to the mean.
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