Consider two identical gold mining companies. Company A issued 1000 shares, worth R5000 each. Company B issued 10,000 shares, each worth R500. Both companies have market capitalisation of R5m. Suppose the gold price goes up by 10%. The effect should be very similar on the companies' market caps. Suppose the share price of Company A goes up 20% to R6000, i.e. by R1000. We would expect company B's share price to go up by 20% as well, i.e. by R100. So, we think it is better to model the share price change as a proportion of share price, instead of modelling the arithmetic change in value.