Relative Strength
The performance of one security measured against another security or an index over the same period.
Formula
Relative Strength = Security Price / Benchmark Price, tracked over time; or Security Return - Benchmark Return
Unit
%
In depth
Relative strength compares two things; the relative strength index compares a security only with its own past. The two are unrelated despite the shared name, and confusing them is among the most common errors in technical vocabulary. Relative strength underlies sector rotation work and the academic momentum literature, where portfolios of relative winners have historically outperformed relative losers over intermediate horizons. That is a statistical finding across large baskets, not a property of any individual security, and this dictionary does not extend it to one.
Worked example
A stock rises 8% while the index rises 3%: relative strength is +5 percentage points. A stock falling 4% while the index falls 11% also shows positive relative strength of +7 points, despite losing money.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Relative Strength” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.