Relative Strength Indicator (Alpha)
by PRASHANT SHAH -
The ratio chart that we discussed is a tool to perform relative strength analysis. Some other techniques may also be used to plot the relationship between two instruments. Relative Strength –Alpha The relative strength indicator (not RSI) is another widely followed indicator to study relative strength. Unlike ratio charts, we need to define the look-back ... Read more
Relative Strength-Alpha Volatility
by PRASHANT SHAH -
The calculation of RS–Alpha compares the returns of both stocks. But let us consider a scenario detailed below. Suppose say stock A generated 10% returns and Stock B 12% over the same period. Logically, stock B is a better performer or an outperformer. Let us introduce another layer of information here in the form of ... Read more
Normalisation of ratio chart
by PRASHANT SHAH -
Many analysts use a normalised ratio chart. This is nothing but a ratio chart that is calculated from a particular base date. To do this, we calculate the price of one instrument by another and start the calculation from a chosen date. The base value on the start date is 100. This makes all instruments ... Read more
