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levalencia
Posted : Sunday, June 23, 2013 4:45:44 PM
Registered User
Joined: 10/20/2012
Posts: 68

I am reading an ebook and I found this statement:

When doing the sector analysis you want to locate those sectors that are showing relative strength against the market.  How can I do this?

 

I have a layout with the industries and I added the RS indicator. However I have no idea how can I check for the above, the RS just gives me a number which I dont know what it means.

 

I also read somewhere else about Beta, that Beta equals to 1, it means the stock moves equally to sp500, above 1, moves faster, below 1 moves slower.

 

How does beta relate to rs? and How can I check the above statement?

Bruce_L
Posted : Monday, June 24, 2013 11:37:08 AM


Worden Trainer

Joined: 10/7/2004
Posts: 65,138

Relative Strength in TC2000 is just the ratio of the active symbol to the comparison symbol. When the relative strength line is moving up, the active symbol is outperforming the RS symbol and under-performing when the line is moving down.

I would probably use Custom Date Sort to sort the Morningstar Industry Group Averages WatchList to identify how industries and sub-industries are performing versus each other. You can also sort other WatchLists using a Custom Date Sort with vs Industry or vs Sub Industry checked to see how individual stocks are performing compared to their own industry or sub industry.

Custom Date Sort
Basics of Custom Date Sort
Finding Resilient Stocks with Custom Date Sort

Beta can now be plotted historically in TC2000 version 12.3 Platinum.

Morningstar Fundamentals
Historical Fundamentals

Beta - The coefficient which measures the volatility of a stock's returns relative to the market (S&P 500). It is based on a 36/60-month historical regression of the return on the stock onto the return on the S&P 500: Ri = a + (Rm) + e where Ri is the monthly total returns on the stock, a is the stock's Alpha, Rm is the monthly total returns on the market (S&P 500), and e is a random error term. A minimum of 12 monthly returns are required for this calculation. A beta of 1 means that the market and the stock move up or down together, at the same rate. That is, a 5% up or down move in the market should theoretically result in a 5% up or down move in the stock. A beta coefficient of 2 suggests that the stock will tend to fluctuate twice as much as the market. That is, if the market moves up 5%, then the stock should move up 10%. A beta coefficient of 0.5 indicates that the stock will move one-half as much as the market, either up or down. A negative beta indicates the stock tends to move in the opposite direction from the general market. That is, the stock price declines when the overall market is rising, or rises when the overall market is declining. Negative beta stocks are rare.



-Bruce
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