Rank: Advanced Member
Groups: Registered, Registered Users
Joined: 11/7/2005(UTC)
Posts: 30
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Hi
Using MetaStock 8.1, what is the best way of comparing performance difference between two securities? My thoughts are:
1. Compare price rate of change (using ROC)
2. Compare gradients
I think I know how to do 1, but I don't know how to do 2. I know I can use the "rise over run" (Y - y/ X -x) to get the gradient of a (an imaginary) line between where Y is the price at time X and y is price at time x (in the past) but would this give me the right picture. If two securities started at $10 in Juanuray 1st and by 31st June one reached $18 and the other reached $30, the gradients would be 18/6 = 3 and 30/6 = 5 (where 6 represents six months).
Any thoughts or inputs in this would be much appreciated. As I say, I am just trying to come up with a way to compare two securities in relative (as opposed to absolute) terms.
Thanks
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Rank: Advanced Member
Groups: Registered, Registered Users, Subscribers, Unverified Users
Joined: 10/28/2004(UTC)
Posts: 3,111
Location: Perth, Western Australia
Was thanked: 16 time(s) in 16 post(s)
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Search through the forum for some work done by Jose and also by me, on Normalisation (or Normalization - locale dependent!)
It will allow you to bound the entire price motion between 0 and 1, allowing direct comparison.
Any problems, ask.
wabbit :D
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