Thank you, Hoopz, for yet another informative contribution to...

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25/09/22

11:52

Post #: 63866142
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Originally posted by HOOPZ: ↑

Here is something interesting. Back in July I was commenting on the extremely high correlation between GLN and the All Ords, which you would expect to some extent, but that the correlation was much higher than with any other lithium stock. GLN seemed to be mindlessly following the index, that it wasn't trading with it's own identity, based on it's own fundamentals (i.e. broader market sentiment has been a much heavier influence in the price action).

Well, we have seen a small change in this dynamic over the past 2 weeks (particularly the week just passed). In the chart below Galan is the red line, the All Ords is overlayed in green, with the S&P 500 in blue. The green area chart shows the correlation co-efficient between Galan and the All Ords, basically the more green area you see the higher the correlation. The blue area chart shows the correlation between Galan and the S&P 500 (which has not been as strong as the All Ords). As you can see the correlation with the All Ords has started to break down over the past 2 weeks - it's been 7 weeks of declining correlation with the S&P 500.

It's not a big deal at this stage but it could be the beginning of a new phase - so something to keep an eye on. It makes complete sense to me that we would have to disconnect from the broader market at some point, at least while Lithium prices continue to maintain nose bleed levels (and are actually breaking new records each week).

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Thank you, Hoopz, for yet another informative contribution to this thread,
showing the lower correlation between GLN and All-Ords and SP500.
I wonder if you could include a broad lithium index, rather than the All-Ords,
to check if this lower correlation also occurred with GLN and a lithium index?
This way, we can speculate more specifically whether it is GLN that is resistant
to changes in the broader markets or to changes in the lithium industry.

GLN Price at posting: $1.33 Sentiment: Hold Disclosure: Held
5 Upvote

0 Great analysis

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