Normalized scale for Relative Strength (RS)

romrom

New member
Hi Thinkscripters,
*Apologies in advance; English is not my native language...

Im struggling to calculate, normalize and compare a Relative Strength (not RSI) ratio for chosen stocks vs. the S&P500 index.
As far as I understand from the multiple articles I have read on this topic, the RS ratio is calculated by dividing an individual stock value by chosen index value (alternatively, by dividing a particular stock's percent change value by desired index percent change value for the same period). Then, the RS values and graphs of different stocks (that were correlated with the same index and period) can be compared.

Questions/Problems -
1. What is your best practice for calculating the RS ratios (stock vs. index)? Can anyone refer to a reliable data source/explain the difference between the two methods:
1.1 stock_price / index_price​
1.2 percent_change_stock / precent_change_index​
* Also, how does the time period variable affect the section 1.1 RS results?​
2. How can I normalize the stocks' RS ratios to compare them?
The RS values and the graphs I get from both methods (the above 1.1, 1.2) cannot be compared between various stocks. The RS values of some stocks are on the x.0 cale, of other stocks are on the 0.x scale, of other stocks are on the 0.0000x scale, etc.

For example, im trying to get the same results as the graphs below.
Trading view settings for AAPL stock: module to compare = "relative strength" or "relative strength of a stock". Period 50 days.
EakfX5w.png


Thank you!
 
Last edited:
Solution
Hi Thinkscripters,
*Apologies in advance; English is not my native language...

Im struggling to calculate, normalize and compare a Relative Strength (not RSI) ratio for chosen stocks vs. the S&P500 index.
As far as I understand from the multiple articles I have read on this topic, the RS ratio is calculated by dividing an individual stock value by chosen index value (alternatively, by dividing a particular stock's percent change value by desired index percent change value for the same period). Then, the RS values and graphs of different stocks (that were correlated with the same index and period) can be compared.

Questions/Problems -
1. What is your best practice for calculating the RS ratios (stock vs. index)? Can anyone...
Hi Thinkscripters,
*Apologies in advance; English is not my native language...

Im struggling to calculate, normalize and compare a Relative Strength (not RSI) ratio for chosen stocks vs. the S&P500 index.
As far as I understand from the multiple articles I have read on this topic, the RS ratio is calculated by dividing an individual stock value by chosen index value (alternatively, by dividing a particular stock's percent change value by desired index percent change value for the same period). Then, the RS values and graphs of different stocks (that were correlated with the same index and period) can be compared.

Questions/Problems -
1. What is your best practice for calculating the RS ratios (stock vs. index)? Can anyone refer to a reliable data source/explain the difference between the two methods:
1.1 stock_price / index_price​
1.2 percent_change_stock / precent_change_index​
* Also, how does the time period variable affect the section 1.1 RS results?​
2. How can I normalize the stocks' RS ratios to compare them?
The RS values and the graphs I get from both methods (the above 1.1, 1.2) cannot be compared between various stocks. The RS values of some stocks are on the x.0 cale, of other stocks are on the 0.x scale, of other stocks are on the 0.0000x scale, etc.

For example, im trying to get the same results as the graphs below.
Trading view settings for AAPL stock: module to compare = "relative strength" or "relative strength of a stock". Period 50 days.


Thank you!

an updated version, that normalizes the RS's

this calculates the relative strength of a stock compared to another (default, SPY)
the first stock RS sets the size of the plots.
can enter up to 7 more stocks. they are scaled to the first stock.
https://usethinkscript.com/threads/...ative-strength-against-spy.12637/#post-113662
 
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