REFS is
a mine of invaluable information for the private investor.
Selecting shares without its help is like trying to
clap with one hand tied behind your back.
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Relative
strength plot
The relative
strength plot shows how the share price has moved relative to
the market, as represented by the FTSE Actuaries All-Share Index.
This is commmonly referred to as 'price relative' performance.
It is the broken line which floats within and outside the shaded
area, and which is superimposed and rebased so that it starts
from the same point as the share price plot.
A rise in
the relative strength plot indicates outperformance, a fall
shows underperformance. For example, if the relative strength
plot doubles in value by reference to the vertical scale, the
shares have outperformed the index by a factor of two. A horizontal
line indicates that the share price has precisely tracked the
Index.
The relative
strength plot is determined by applying to a constant (the value
of the index on the date the plot commences) a time series of
factors which comprise the adjusted share price as the numerator
and the index as the denominator.
Interpretation of the relative strength plot
Common characteristics of the relative strength plot
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