Short Interest Ratio


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Short Interest Ratio

In technical analysis and fundamental analysis, a ratio of the short-sold shares of a publicly traded company to the trading volume over a given period of time. This is an indication of the market's sentiment regarding a particular stock. A higher ratio indicates a feeling that the stock will decline in value, while a lower ratio indicates general belief that it will rise. It is not an exact indication, as it fails to take into account matters such as the potential exercise of convertible shares. Fundamental analysts interpret a high ratio as bearish because it shows an expectation for lower prices; on the other hand, technical analysts see a middling ratio as bullish as it may indicate a demand for a stock among hedge funds unable to cover a short sale. The short interest ratio is also called days to cover. See also: Hedge fund.
References in periodicals archive ?
Hypothesis 1B: Action repertoire volume will exhibit a U-shaped relationship with short interest ratio.
Hypothesis 2B: Action repertoire complexity will be negatively related to short interest ratio.
Hypothesis 3B: Action repertoire non-conformity will be negatively related to short interest ratio.
Short interest ratio. A firm's short interest ratio is the percentage of the total shares outstanding in month that are sold short.
This indicates that action repertoire volume exhibits a U-shaped relationship with short interest ratio.
Next, we calculate the average change in our short interest measure from month to month and use t-tests to determine whether observed changes in the short interest ratio are statistically significant.

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