A Comprehensive Guide To Technical Peer Analysis

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A Comprehensive Guide To Technical Peer Analysis banner

The prices of stocks and securities in the financial markets are not always moving on a standalone basis. They are tied to various factors like company-specific information, general supply and demand in the market and even the performance and news related to peer stocks. This is why peer comparison is a crucial part of technical analysis.

However, many traders focus solely on studying the technical indicators of stocks on a standalone basis. While this can offer some valuable trading insights, peer analysis elevates your trading strategy further and makes it easier for you to understand the behaviour of stocks and securities more comprehensively.

In this article, let us explore the importance of analysing the technical indicators of peer securities in stock analysis and examine how you can carry out peer comparison effectively.

What is Peer Comparison?

Peer comparison is the process of evaluating a stock or any other security against others in the same industry. In addition to this, peer analysis may also involve comparing the different aspects of a stock or asset with the industry it belongs to or with any other specific benchmark. For example, peer comparison for mutual funds may require comparison with a benchmark index.

When you carry out peer analysis, you are essentially checking if the stock is priced right or if it is performing well when compared to its peers, competitors or the sector and industry at large. Depending on the type of peer comparison you are carrying out, you can identify if a stock is overvalued or undervalued, or if it is gaining or losing momentum compared to its peers within the same sector.

This essentially means that peer analysis can be performed for both long-term investing and short-term trading. When you perform peer comparison with a long-term outlook, you look into the fundamental aspects of a stock and examine various financial measures like the price-to-earnings (P/E) ratio, growth rates, revenue, profit margins and debt levels among companies in a similar business.

In technical peer comparison, you look at the technical indicators of a stock. Let us see what this means.

An Overview of Technical Peer Comparison

Technical peer comparison involves looking at the technical aspects of stocks within the same industry or sector to see how they stack up against each other. When you do this kind of analysis, you are essentially looking into the stock's price movements, trends and trading volumes over time.

To carry out technical peer comparison and compare stocks effectively, you can use various technical indicators such as moving averages, Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). Moving averages can help you see the general price trend of a stock and whether it’s performing better or worse than its peers. The RSI, meanwhile, can indicate whether a stock is overbought or oversold relative to its competitors.

By analysing price patterns and trends, you can also spot similarities or differences across the industry. This comparison helps you identify which stocks are leading or lagging in the sector. It also lets you dig deeper into the market’s view of different companies and provides a clearer picture of where each stock stands in a highly competitive market sector.

All in all, by doing a technical peer comparison, you can gain insights into the relative strengths or weaknesses of stocks within the same sector. This information is crucial for making more informed trading decisions.

How to Identify Peers for a Stock?

The first step to performing technical peer comparison is to identify the peers for comparing the stock you are interested in. To do this, you need to find companies that are similar in terms of industry, size, market capitalisation and other relevant factors.

Here are some factors that you need to consider to find the right peers to compare a stock.

  • Industry Classification

Start by determining the industry of the stock you are analysing. Stocks are typically grouped into sectors and industries like technology, healthcare, finance, automobile or energy. This classification helps you narrow down a list of potential peer stocks that operate in the same business environment and face similar market opportunities and risks.

  • Market Capitalisation

You can also look for companies with similar market capitalisation or market cap — which is the total market value of a company's outstanding shares. This factor helps categorise companies as large-cap, mid-cap and small-cap entities. By comparing a stock with that of companies of similar sizes, you can gain a more accurate sense of how it is performing relative to its peers.

  • Business Model and Operations

To identify stocks for peer analysis, you must also consider the business model and operations of the companies. Even within the same industry, companies can have different business models and serve different market segments. Identify stocks of companies that offer similar products or services and have a common customer base as your target company.

  • Financial Performance and Health

Compare the financial performance and health of these companies to get a better idea of how similar or different they are. Look at key financial metrics like revenue growth, profitability, debt levels and cash flow. This step ensures that you are comparing your stock with peers that are in a similar financial condition.

  • Geographical Presence

Consider the geographical presence and market reach of the companies that you have shortlisted as peers. Entities that are operating in the same regions or global markets as your target stock may have similar opportunities and risks. This makes them more suitable peers for comparison than other companies that face different business outlooks.

  • Trading Volume and Liquidity

Ensure that the peers you select have sufficient trading volume and liquidity. This is important for technical peer comparison and analysis, which relies entirely on price and volume data. Stocks with low trading volume may not provide reliable technical signals. So, you may have a tough time calculating and comparing different indicators.

  • Historical Performance

It is also important to look into the historical performance of the companies that may be suitable peers for your target stock. This helps you identify crucial trends — like how these stocks have performed during different market cycles or how they have sustained bearish market cycles. With this, you gain valuable insights into their relative strength and resilience.

In addition to comparing the above factors, you can also utilise financial databases and stock analysis tools to identify and compare peers more efficiently. Many financial websites and platforms offer peer comparison tools that automatically suggest similar companies based on various criteria.

A Step-by-Step Guide to Technical Peer Analysis

Now that you know how to identify peer stocks, let us move on to discuss the process of comparative technical analysis. To gain more trading insights with technical peer comparison, here is what you need to do.

  • Identify the Industry and Peers

Begin by selecting the industry you're interested in. Once you have that, pick a handful of companies within that industry that serve as direct competitors to the stock you are analysing. For instance, if you are analysing a tech company, you might compare it to others in the tech sector. You can also use the pointers discussed in the previous section to identify other peers.

  • Gather Historical Price Data

Obtain historical price data for each company you are analysing. This data should include daily opening, closing, high and low prices, as well as trading volume. The good news is that numerous financial websites and stock market analysis tools provide this data.

  • Analyse Price Patterns and Trends

Look for patterns on candlestick charts to identify trends and signals. Patterns like head and shoulders, double tops and bottoms and triangles can signal future price movements or reversals. Compare these patterns across the companies to see if there are any industry-wide trends.

  • Volume Analysis

Volume is a measure of how many shares have been traded in a given period. It is a key aspect of technical analysis, especially peer comparison, as it tells you how liquid or illiquid a stock is when compared with its competitors. It can be used to confirm trends, with rising volume often confirming a new trend and decreasing volume potentially signalling a reversal or slowdown.

  • Use Technical Indicators

Technical indicators are mathematical calculations that use information like the price, volume or open interest of a security. Common indicators include moving averages, Stochastic Oscillators, Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). By comparing the technical indicators of different peer stocks, you can assess if your target stock is moving along with or against the trend.

  • Compare Relative Performance

Next, use comparative analysis to determine how each stock is performing relative to its peers and the broader market. This can help you identify which stocks are leaders (outperforming) or laggards (underperforming) within their sector.

  • Sentiment Analysis

Although primarily technical, peer analysis also requires you to understand the market sentiment towards a particular sector or stock. To analyse this aspect, you need to read through analyst reports and news articles and check the general opinion regarding any stock and its company on social media and investment forums.

  • Risk Assessment

The next step is to assess the risk associated with each stock in your peer comparison exercise. This involves understanding the standard deviation and volatility of the stock, which can be measured using different technical indicators like beta — a measure of a stock's volatility in comparison the overall market.

  • Make a Decision

Based on your analysis, decide which stock(s) are the best candidates for a trade. Look for stocks with strong technical indicators, positive patterns and trends, and solid relative performance within their industry.

  • Monitor Regularly

Technical analysis is not a one-time task because the markets are dynamic and constantly changing. So, it is essential to continuously monitor and adjust your analysis and decisions based on new data and market conditions.

Peer Comparison: Which Technical Indicators to Evaluate?

Before we wind up this discussion on technical peer comparison, there is one more crucial aspect you need to be aware of. You must know which technical indicators to evaluate. While several indicators offer crucial trading insights, here are the most common indicators that you can look into before you initiate a trade based on peer analysis.

  • Moving Averages (MA)

You can use moving averages to see the average price of a stock over a given period. For peer comparison, check if a stock stays above or below its peers' moving averages, like the 50-day or 200-day MA. This can show if a stock is stronger or weaker than others in its group.

  • Relative Strength Index (RSI)

The RSI helps you figure out if a stock is overbought or oversold, which means it might be too expensive or too cheap. By comparing the RSI values of different stocks, you can see which ones might be due for a price change.

  • Moving Average Convergence Divergence (MACD)

The MACD compares two moving averages of a stock’s price, so it can signal the strength and direction of a stock's trend. When you look at MACD across peers, you can spot which stocks are gaining or losing momentum.

  • Volume Analysis

High trading volume can confirm the strength of a price move. When a stock has a higher trading volume than its peers, it might mean there’s more interest and potentially more stability or growth in its price.

  • Volatility Measures

Tools like Bollinger Bands or the Average True Range (ATR) show how volatile the price of a stock is. Comparing these indicators can help you understand the level of risk of different stocks within the same sector.

  • Price Performance

Look at how the stock prices have changed over time, such as over the past 3, 6, or 12 months, to see which ones are doing better or worse than their peers.

  • Chart Patterns

Identifying common patterns in price charts can give you insights into future price movements. To find potential trading opportunities or risks, compare these patterns across similar stocks.

  • Fibonacci Retracements

This tool helps you find key levels of support and resistance for a stock. By comparing where a stock falls on its Fibonacci levels, you can gauge its potential reversal points relative to the stock’s peers.

  • Sector Indices Performance

Sometimes, it may be useful to compare a stock’s performance against the whole sector’s performance to get a broader view of how it stands among its competitors.


This sums up the basics and the finer details of technical peer comparison. Before you enter into a short-term or medium-term trade in the market, ensure that you compare a stock with its peers to gain more trading insights into the stock’s potential performance in the future.

Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - grievances@samco.in Research Analysts -SEBI Reg.No.-INHO0O0005847

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