Why people look at them together
The chip industry is split into stages such as design, equipment, manufacturing and memory, and the companies in each stage are spread across several countries. Many chip designers, equipment makers and large tech companies are listed in the US, while Samsung Electronics and SK hynix, both memory makers, are Korea's flagship large caps. Because they react to the same industry news, such as data center spending or demand for devices, their charts are often compared side by side. Being compared often, however, is a very different thing from one market driving the other.
Get the order in time right first
The US regular session opens during the Korean evening and closes before dawn, and the Korean market opens a few hours later at 9:00 a.m. That means a US daily candle is finished before the next Korean daily candle. If you overlay the two charts by matching dates, this one-day offset is easy to miss.
- The US Monday candle is completed early on Korean Tuesday
- The first Korean session that can react to it is Tuesday's
- Something that happens during Korean hours can show up first in that night's US session
- Holidays differ between the two countries, so sometimes only one market is open
What to put side by side
Comparing one stock with another leaves you exposed to company-specific news. Working from broad to narrow makes it easier to see the overall flow.
- Philadelphia Semiconductor Index: a basket of US-listed chip companies, for the mood of the whole industry
- Nasdaq-100: for the broader tech picture
- A few well-known large-cap tech names: for differences within the industry
- Samsung Electronics and SK hynix daily charts together with the won-dollar rate
How the overnight move feeds into the open
The Korean market sets its opening price through a pre-open call auction before 9:00 a.m. News and price changes from overseas markets overnight get mixed into those orders, so on some days the open lands well away from the previous close. But the open is only a starting point. Once trading begins, local news, exchange rates and the buying and selling of foreign and institutional investors come into play, and the direction can change. So knowing how US chip stocks did overnight may help you gauge the mood around the open, but it does not decide how the day ends.
Why you should not assume cause and effect
Two charts moving the same way does not make one of them the cause. Both may simply be responding to the same outside factor. These are common misreadings.
- Ignoring shared drivers such as interest rates or the economic outlook that act on both markets
- Expecting identical moves from companies in the same industry with different businesses
- Generalizing from a few times it seemed to work
- Forgetting that how closely they move together changes from period to period
Focus on the differences
Stretches where the two diverge can sometimes tell you more than days when they move together. Put the US chip index and the two Korean stocks on a cumulative return chart that starts them all at 100 on the same day, and you can see at a glance where the gap opened up. When you spot such a stretch, look up what news came out and how the exchange rate moved at the time. Keep in mind that the Korean stocks are priced in won and the US index in dollars. In periods of large currency swings, the picture changes depending on whether you convert to a single currency.
Check it with this site's live tools
The world markets overview includes the Philadelphia Semiconductor Index in its US index group and also shows which markets are open right now and the won-dollar rate. The stock comparison tool lets you start Korean stocks and US indexes or stocks at 100 on the same day and compare cumulative returns and correlation, with an option to convert to won. The large-cap scanner sorts Korean and US large caps by daily change and indicators in one table. Prices come from a data provider and may be delayed.
Things to keep in mind
This guide explains how to read the two markets' charts together and is not investment advice. It does not recommend buying or selling any stock, and it does not claim that overnight US moves can predict the next day's Korean prices. Relationships that held in the past can change. Investment decisions and their outcomes are your own responsibility.
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