

Human: A friend was telling me about relative value in stocks but I didn't really understand the concept. Can you help me understand what relative value means in stocks?

Assistant: “Relative value” is a way to compare the price of different stocks and how a stock is performing relative to other similar stocks.  In a market that is subject to trends or fads, relative-value analysis is an important way to determine if a company is over- or under-valued and is therefore prime for investment.  If a trend drives up the stock price of an Apple iPhone, for example, relative-value analysis can be used to determine if cheaper alternative phones are undervalued due to the Apple iPhone craze.


Human: A friend was telling me about relative value in stocks but I didn't really understand the concept. Can you help me understand what relative value means in stocks?

Assistant: Relative value is a financial concept for comparing two different securities or assets.  Basically the phrase describes the idea of comparing the value of an asset with the value of another similar asset.  
For example, suppose a stock and bond offer a similar yield (the amount of interest paid by the asset to investors).  If the stock's price is lower than the price of a similar bond, then it would have a relative value advantage over the bond, because the stock purchase would deliver a high-value yield at a lower price.
A friend was telling me about relative value in stocks but I didn't really understand the concept. Can you help me understand what relative value means in stocks?
“Relative value” is a way to compare the price of different stocks and how a stock is performing relative to other similar stocks.  In a market that is subject to trends or fads, relative-value analysis is an important way to determine if a company is over- or under-valued and is therefore prime for investment.  If a trend drives up the stock price of an Apple iPhone, for example, relative-value analysis can be used to determine if cheaper alternative phones are undervalued due to the Apple iPhone craze.
Relative value is a financial concept for comparing two different securities or assets.  Basically the phrase describes the idea of comparing the value of an asset with the value of another similar asset.  
For example, suppose a stock and bond offer a similar yield (the amount of interest paid by the asset to investors).  If the stock's price is lower than the price of a similar bond, then it would have a relative value advantage over the bond, because the stock purchase would deliver a high-value yield at a lower price.