Definition
Relative Strength (Comparative)
Comparative relative strength measures how a stock performs against an index or sector to find leaders and laggards.
Unlike the RSI oscillator, comparative relative strength simply divides a stock's price by a benchmark like Nifty to see whether it is outperforming or underperforming. A rising ratio means the stock is stronger than the market; a falling one means it is weaker.
Indian traders and investors use relative strength to rotate into sectors and stocks leading the market and to avoid laggards, especially in momentum and positional strategies. Pairing it with sector indices helps identify which themes — banking, IT, auto — are driving the market at a given time.
Related terms
- TrendlineA trendline is a straight line connecting a series of highs or lows to visualise the direction and slope of a trend.
- BenchmarkA benchmark is the market index a fund is measured against, such as the Nifty 50, to judge whether the fund is genuinely beating the market or merely riding it.
- BetaBeta measures how much a stock tends to move relative to the overall market.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.