A sentiment indicator that is derived by dividing the short interest by the average daily volume for a stock. This indicator is used by both fundamental and technical traders to identify the prevailing sentiment the market has for a specific stock.
The Difference Between a Short Interest Ratio and Short Interest
It is essential to remember that the short interest ratio and short interest are not the same. Short interest measures the total number of shares that have been sold short in the market. The short interest ratio is a formula used to measure how many days it would take for all the shares short in the market place to be covered.