Replies to post #28961 on Alto Ingredients Inc (ALTO)

[Dutch1]

Thanks, Oil moved up...so as it seemed a bit unrelated they are now in pace again.

[Mortenm]

Dutch, thanks for your charts. They provide a good picture of the price movements and the price correlations between commodities.
However, if we want to analyse the correlation between stock price of PEIX and the commodity prices, I think the chart only provides a fraction of the whole picture.

In my opinion the next step in the analysis would be to include production and inventory - not isolated, but in relation to the oil, ethanol, corn, and stock price.

We see that PEIX and oil are positively correlated.
We also see that oil dominates ethanol price with regard to PEIX stock price.

Would it be difficult to make the following:
- Chart: Oil price, oil inventory, and oil production
- Chart: Ethanol price, ethanol inventory, and ethanol production
- Chart: Corn price, corn inventory, and corn production
With the same time horizon.
The reason for including inventory as well as production is the implicit demand. If production increases, and consumed by demand, inventory is status quo. Likewise inventory can drop if demand decreases with steeper slope than production, but how does price react? Does price react to demand or inventory. This would be interesting.

On another note, earnings, EBITDA, PEIX inventory, and acc receivables would also impact the "macro" correlations discussed above.

My hypothesis is that PEIX stock price follows ethanol demand, and the demand of ethanol is not perfectly inversely correlated with prices of oil due to the price-driven consumption of oil may not be in gasoline but more industrial consumption abroad and in even in US.