Relative Strength is a technical analysis tool that compares the performance of a particular stock to a benchmark, such as the S&P 500 index. It is calculated by dividing the stock's price by the benchmark's price and expressing the result as a percentage.For example, if a stock has a relative strength of 120, it means that it has performed 20% better than the benchmark over a given period of time. Conversely, if a stock has a relative strength of 80, it means that it has underperformed the benchmark by 20%.Relative strength can be used to identify stocks that are outperforming the market, as well as those that are underperforming. Some investors believe that stocks with high relative strength are likely to continue outperforming the market, while those with low relative strength may be due for a rebound or may be at risk of further underperformance.However, it is important to note that relative strength is just one factor to consider when evaluating a stock, and it should be used in conjunction with other fundamental and technical analysis techniques.
