New Members: Be sure to confirm your email address by clicking on the link that was sent to your email inbox. You will not be able to post messages until you click that link.

Ratio analysis

I often use ratio comparisons between various tickers and indexes. When comparing two symbols of similar value, the results are reasonably accurate. When comparing two symbols of extremely different value the results will be distorted. I recall reading an article (that I can't find) that addressed the distortion by using percent change rather than closing price for calculations thus eliminating the distortion. I'm hoping someone can either provide the link to the article or explain how to do it. Thanks, Techstocklover

Comments

  • markdmarkd mod
    edited September 5
    I think you want the Price-Performance indicator with the ratio symbol, e.g. INTC:$DJUSSC

    Here is an article from Chart School - not sure if it's the same one - see last section:

    https://support.stockcharts.com/doku.php?id=sharpcharts:overlaid_charts

    Although the article suggests using this indicator with a Performance chart, it works fine as a separate indicator above or below the price window of a Sharpchart. The main thing is it uses a per cent scale.

    One thing to note - the "per cent" reading will vary depending on the length of the chart. For instance, the nine month INTC:$DJUSSC will read (as of the close 9/4/19) -12.45% cent (meaning INTC has underperformed its index compared to the chart starting point 9 months ago) while it will read -2.07% on the three month chart. BUT, the path of the RS line on the 3 month chart is completely analogous (proportional) to the last three months of the nine month chart. Only the starting point has changed. The relationship (relative performance) has stayed the same (i.e., the ticks up and down are proportionally the same).
Sign In or Register to comment.