One number for moving together: how to read the asset class correlation table

The Market page has a table that pairs up seven assets, the KOSPI, KOSDAQ, Nasdaq, S&P 500, KRW/USD exchange rate, gold and WTI crude oil, and sums up in one number whether each pair moved in the same direction over the last 90 days.

Unlike a grade or PER, this table does not ask “is this asset good?” It answers an entirely different question: “did these two move together?” It looks at whether two assets went up and down in the same direction day by day, went opposite ways, or showed no clear relationship.

So the table should not be read as a ranking of which assets are better. What it holds is not a ranking but a relationship.

A correlation coefficient is a number between -1 and +1. The closer to +1, the more the two assets moved in the same direction day by day; the closer to -1, the more they moved in opposite directions. Around 0, there was no clear co-movement.

The colors in the table only mark direction as a supplement. Reddish tones mean the same direction and bluish tones the opposite direction, and the color intensity is deliberately kept low. This is so the table reads by its numbers even without color, and so nothing is misread when colors are hard to tell apart. The strength of a relationship is read from the number, not the color.

There is no fixed boundary such as “0.7 means a strong relationship.” The same 0.5 can be common for one pair of assets and rare for another. Reading a number against other pairs works better than cutting it at an absolute threshold.

This is the most common misunderstanding. A high correlation does not mean two assets moved by the same amount. Even at 0.9, one might have moved 3% a day and the other 0.1%.

What the correlation coefficient measures is only how often the direction matched, not whether the size matched. Moving together and moving by the same amount are different questions.

So this single number should not be read as “when one goes up, the other goes up by as much.” The table says nothing about the size of the moves.

The table looks only at daily returns from the last 90 days. Relationships older than 90 days are numbers it has already discarded.

Relationships between assets are not fixed properties. Two assets that moved together in one stretch can go their separate ways in another. The 90-day window shows only how things have been lately; it does not declare that the two are inherently linked.

So today's table should not be frozen into a permanent property of two assets. As the window moves on, the numbers change too.

Two assets moving in the same direction does not mean one pushed the other or that both share a common cause. They may simply have overlapped by chance over the same stretch.

Correlation shows the shape of a relationship but does not give its reason. Jupick says neither why things moved as they did nor what happens next. This table is a record of the past 90 days, not a promise about the next 90.

Reading correlation as cause means inventing a story the table does not contain.

Some cells in the table show a hyphen. That means the two assets had fewer than 30 overlapping trading days, which is treated as too few to trust, so the pair was left out of the calculation. Assets whose value did not move at all for a while, or whose feed stopped for more than ten days, are also left out.

So a hyphen does not mean a bad value; it means there were not enough days measured together. A missing value and a bad value are different things.

Assets that trade in different time zones are compared by pairing closing prices on the same date, so about half a day of time lag is mixed in. Because the US market opens after the Korean market closes, two closing prices grouped under the same date may in fact be values from points in time half a day apart.

This table is not a ranking of assets. A high correlation does not make an asset good, and a low one does not make it bad.

It is not a future relationship either. That two assets moved together over the last 90 days is no assurance that they will do so again.

This content is for information only and is not investment advice. Jupick does not suggest trading any particular asset and does not forecast the future direction of prices. A correlation coefficient is only a statistic summarizing a past stretch. Investment decisions and responsibility for them rest with the user.