Exchange Announces KOSPI USD Spot Index... Higher Returns and Lower Volatility than KOSPI
The Korea Exchange announces the calculation and publication of the 'KOSPI USD Spot Index,' which offers the effect of diversified investment in stocks and the US dollar. Compared to the KOSPI Index, it is characterized by higher returns and lower volatility.
According to the Korea Exchange on the 25th, the KOSPI USD Spot Index is calculated every 10 seconds during trading hours by reflecting real-time changes in the won-dollar exchange rate relative to the base date (January 3, 2011) on the existing KOSPI Index. It was developed to respond to investment demand seeking to mitigate volatility caused by increased uncertainty in the stock market and to pursue stable returns. It has been available since the 8th.
The KOSPI USD Spot Index has shown higher long-term returns compared to the existing KOSPI Index. From 2011 to April of this year, the KOSPI Index rose by 20.8%, while the KOSPI USD Spot Index increased by 43.6%, more than double the return. The Korea Exchange explained that especially when stock prices fell or remained flat, the KOSPI USD Spot Index showed relatively better returns compared to the existing KOSPI Index.
Additionally, due to the tendency of the KOSPI Index and the won-dollar exchange rate to move inversely, the KOSPI USD Spot Index exhibits less volatility compared to the KOSPI Index, making it more stable. During the period, the volatility of the KOSPI USD Spot Index was 14.03%, which is 2.67 percentage points lower than the KOSPI Index volatility of 16.7%.
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A Korea Exchange official stated, "The KOSPI USD Spot Index is expected to be used as an underlying index for financial products such as exchange-traded funds (ETFs), providing investors with an effective means of diversified investment and contributing to the activation of the securities product market through product diversification."
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