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When we compare the movement of the stock with the index there is more relation between Ultratech stocks to that of ACC Cement company stock. So we can say that the sensitivity is more for Ultratech stock as a small change in the index would affect the stock prices of the company largely.

A higher value of Sharpe ratio tells us that the investment in those stocks is a smart investment. The Sharpe ratio for both the companies stocks is negative which shows that they are not preferable.

A low and a negative value of the Treynor ratio is an unfavorable performance of the stock. In these two companies the Treynor ratio is negative which is not preferable.

TECHNICAL ANALYSIS

RELATIVE STRENGTH INDEX (RSI)

The relative strength of a stock is a measure of a stock’s price against its past performance. It helps to determine the internal strength of the stock. It is a versatile tool, and can be used to:

Generate buy and sell signals

Show overbought and oversold conditions

Confirm price movement

The scale is set from 1 to 100, and when RSI rises to 70, it indicates that the stock could be getting overbought. Conversely, if the RSI drops below 30, the stock could be getting oversold and you may want to accumulate share. It enables you to apply a simple formula to draw a meaningful conclusion about the price strength of a single stock. This is a technical momentum indicator that quantifies the magnitude of gains and losses to determine whether the stock is overbought or oversold. This RSI calculation is based on 14 periods, which is the default.

The formula for relative strength is: RSI = 100 - (100 / (1 + RS)). In this formula, RS = (average of (x) days up closes) / (average of (x) days’ down closes).

RSI can be calculated over any time period. Very short-term traders may track RSI over just a few minutes, whereas traders willing to wait for longer time periods may want to use RSI over several months. Here is an example:

RSI Buy Signal

Buy when the RSI crosses above the oversold line (30).

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