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Registered User
Joined: 11/28/2005
Posts: 7
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Hi, TC2005 offers a relative strength test such as comparison with industry index and report a figure in the sort column. What does the figure means and what is the formula behind the RS comparison?
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Worden Trainer
Joined: 10/1/2004
Posts: 4,308
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Here is the definition from the TeleChart Help Files:
The relative strength graph is generated by comparing the relative price performance of any two items (such as two stocks or a stock and a market index). It is simply the ratio of the value of your active symbol to the value of your comparison symbol. If active symbol is out-performing your comparison symbol, the relative strength line will be rising.
When plotting RS against an industry as you described, it is the ratio of the value of the active symbol to the composite value of the industry components.
- Doug
Teaching Online!
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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I essence, the value itself does not matter as much as how that number changes over time.
- Craig
Here to Help!
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Registered User
Joined: 11/28/2005
Posts: 7
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Hi, tks for replying. However I am refering to the number that reflect on the sort column after doing a "versus industry index". How to interpret the figure? Does a -5% meaning its perfoming below the index by 5%?
Does "versus industry index" compare each stocks to every stocks in the industry or does it compare individual to the index only? And subsequently rank them. Pls provide the methodlogy and calculation if possible. Tks.
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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Gotcha! I thought you were talking about the indicator.
The number is the percentage point difference in performance.
If the stock was up 10% and the index was up 15% it would return -5%.
If the stock was up 20% and the index was up 15% it would return +10%.
If the stock was down 15% and the index was up 15% it would return -30%.
If the stock was down 5% and the index was down 15% it would return +10%.
Check out this video:
Sorting Stocks by their Absolute or Relative Performance
- Craig
Here to Help!
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