relative strength

Relative Strength

A measure of price trend that indicates how a stock is performing relative to other stocks in its industry.

Notes:

It is calculated dividing the price performance of a stock by the price performance of an appropriate index for the same time period.

See also: Indicator, Mechanical Investing, Relative Strength Index (RSI)

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Relative strength

Movement of a stock price over the past year as compared to a market index (like the S&P 500). A value below 1.0 means the stock shows relative weakness in price movement (underperformed the market); a value above 1.0 means the stock shows relative strength over the one-year period. Equation for Relative Strength: [current stock price/year-ago stock price] divided by [current S&P 500/year-ago S&P 500]. Note: this can be a misleading indicator of performance because it does not take risk into account.

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relative strength

The price strength of an individual stock compared with the strength of an industry index or a general market index. In general, a stock that acts stronger than its industry or the market as a whole shows a bullish sign for that stock. Likewise, an industry index that acts stronger than a market index is bullish for stock in that industry. Relative strength is typically used when calculating an index of a stock's price to its industry or market index over a period of time. Also called strength.