Relative Strength Comparison

Last modified 08:22, 27 Nov 2012

Relative Strength Comparison

The Relative Strength Comparison is part of the Comparative Indicators group. It measures the strength of one market indicator or instrument against another.

The Relative Strength Comparison indicator can be used to measure any two instruments: one stock against another, a stock against a sector index, or a sector index against a major index, etc.

In the following example a Coca-Cola (KO) price chart has been Overlaid by Pepsi-Co (PEP), the series have then been linked using the Scale settings and the RSC indicator displayed for both:


In the above example, during October Coca-Cola continued its steady increase while Pepsi-Co's share price had a slight dip. The RSC chart showed Coca-Cola to be relatively stronger during this period.

A rising ratio line indicates the chart series symbol (numerator) is stronger relative the benchmark it is being compared to.
Conversely a falling ratio line indicates a weaker numerator and a stronger denominator and hence the chart series symbol is relatively weaker to the other.

In Your SOFTWARE the charted symbol is always the numerator and cannot be changed.

Set the denominator in the Parameters tab of the Relative Strength Comparison properties dialog. Enter the symbol for the denominator in the Base Symbol text box and also enter the Exchange where the instrument is traded.

Note - This indicator is not to be confused with J Welles Wilder's Relative Strength Index, which is an oscillator measuring the rate of price change of a single instrument.

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