Searchlight Innovations Inc T.SLX

RE: Thought our Board was dead?

[sunwood]

Hello Bogapet:

    I was looking  at the StockChart you posted, i.e. SLX.TO:$Silver and mulling over your comment about the close correlation with the price of silver.  It certainly looks very close.

    But then I started to wonder what effect a low stcok price versus the $40 price of silver has on the visual image provided by the chart, so I substituted several of the main silver juniors one at a time, to see what each looked like.
I had the impression that the higher priced stocks showed more noticeable deviations from the Silver line.

     I also used Silver Wheaton because it's price is very close to the price of silver.  If the prices of SLW and Silver were actually equal, even though they aren't and have no reason to be, the correlation would be 1.0 

    In the case of Slivermex, at the end of last December, it;s correlation was .0355 when SLX was $1.05 and Silver was at $30.43.  Today SLX, with a price of .60 and Silver at $40 shows a correlation of .015.  In and of itself, that doesn't look too unreasonable.

    But, does the narrow difference between .015 and .0355 really present the same pictorial image on the chart as in the Silver Wheaton (SLW) case?

    I'm not suggesting that I am all that knowledgeable about charts, etc.  (I wish I were that good at math!)  But it seems to me that lower the price of the stock that we select to compare to Silver, the less significant any fluctuation in price will appear on the chart, because the price of Silver would be the "elephant in the room" , so to speak.

    I'd appreciate your input on that!

Kindest regards,
Sunwood
ps I have tried to word this post as accurately as I can, but would be delighted if you or any math whizzes in the audience would clarify my thinking for me.  Thanks!