Relative Rotation Graph
A Relative Rotation Graph (RRG) is a charting tool developed by Julius de Kempenaer that plots the relative strength and momentum of multiple securities or sectors against a common benchmark simultaneously, using JdK RS-Ratio and RS-Momentum axes to classify each into one of four rotational quadrants.
Julius de Kempenaer introduced the Relative Rotation Graph in 2011 while working as a technical analyst in the Netherlands. The tool addresses a limitation of conventional relative strength charts, which compare one security to a benchmark on a single line, by enabling the simultaneous display of all sectors or securities in a common visual framework that also captures the direction of their relative strength momentum.
The horizontal axis represents the JdK RS-Ratio, a smoothed and normalised measure of a security's price relative to its benchmark. A reading above 100 means the security is outperforming the benchmark; below 100 means underperformance. The vertical axis represents JdK RS-Momentum, a rate-of-change measure of the RS-Ratio itself. A reading above 100 indicates the relative strength trend is accelerating; below 100 indicates deceleration.
The four quadrants defined by these axes correspond to four stages of a rotational cycle. The Leading quadrant (top right: high RS-Ratio, high RS-Momentum) contains securities that are outperforming the benchmark and gaining relative momentum — the most desirable position. The Weakening quadrant (bottom right) holds securities that still outperform but are losing relative momentum. The Lagging quadrant (bottom left) contains underperformers losing relative momentum. The Improving quadrant (top left) holds underperformers that are beginning to gain relative momentum.
The rotation typically proceeds clockwise through the four quadrants, though securities can skip quadrants or reverse direction. The 'tail' displayed on each security's plot — showing its trajectory over the most recent weeks or months — is the most analytically valuable feature: a long tail entering the Leading quadrant from Improving signals an early stage of outperformance and is favoured by momentum investors.
In the Indian context, RRG charts are widely applied using NSE sectoral indices — Nifty IT, Nifty FMCG, Nifty Pharma, Nifty Bank — against the Nifty 500 or Nifty 50 benchmark. The chart immediately highlights which sectors are rotating into leadership, helping portfolio managers overweight emerging leaders and reduce exposure to weakening sectors. Bloomberg Terminal, StockEdge, and Trendlyne offer RRG visualisations for Indian sectoral indices. The weekly timeframe is standard for tactical allocation decisions; monthly timeframes suit strategic asset allocation.