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Relative Strength (RS) Ratio and RS Momentum are the core data engines powering Kalpi’s institutional Relative Rotation Graphs (RRG). Together, these two metrics allow you to evaluate where your algorithmic strategy sits within the broader market cycle. Instead of measuring absolute returns, these metrics measure rotational dominance.

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1. RS Ratio (The X-Axis)

The RS Ratio measures the pure, structural outperformance of your portfolio against a benchmark (like the Nifty 50).
  • A score above 100 means your strategy is currently in a primary structural uptrend against the market.
  • A score below 100 means your strategy is structurally lagging and underperforming the broader market.

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2. RS Momentum (The Y-Axis)

The RS Momentum measures the rate of change of the RS Ratio. It tells you the velocity at which your relative strength is accelerating or decelerating.
  • A high momentum score means your strategy is rapidly gaining ground.
  • A dropping momentum score serves as an early warning indicator that your trend is losing gas, even if the RS Ratio is still technically above 100.
Institutional Application: The most profitable algorithmic strategies identify asset baskets when their RS Ratio is below 100 (Lagging) but their RS Momentum is violently spiking upward (Improving), allowing you to catch major sectoral rotations before the retail market notices.