Relative Strength Alert: Will the Coca Cola Hbc Ag (LON:CCH) share price keep rising?

Coca Cola HBC Ag (LON:CCH) recently reported its full-year results for 2018. with revenues increasing 2% to EUR6.66bn and net income up 5% to EUR447.4 for the fiscal year ended 31 December 2018.

Business is good for the Switzerland-based bottler of Coca-Cola products, which produces, sells and distributes beverage brands across 28 countries. The group does expect the 2019 financial year to be slower in terms of growth.

How Coca Cola Hbc Ag (LON:CCH) performed against the market?

Over the past year, the Coca Cola Hbc Ag share price has risen by 3.36%, which sounds pretty good. As it turns out, the FTSE All-Share index is up slightly over the past year, after a tough second half of 2018. So Coca Cola HBC's shares have a 1-year relative strength of 2.11%.

Relative strength is a crucial tool in the armoury of technical traders and investors. It’s an instant measure of how a stock has performed in comparison with a benchmark, and research shows that price trends often persist.

Studies by Narasimhan Jegadeesh and Sheridan Titman, who are leading experts on momentum, show that stocks with the strongest price strength tend to keep up the pace for anywhere up to one year, possibly due to two behavioural biases:

• Under-reaction - prices are slow to move up because investors are hesitant to bid prices higher in stocks that have already been on a strong run.

• Delayed over-reaction - investors chasing rising prices attract the attention of other investors, who follow them into those trades, pushing prices higher and higher.

What does this mean for potential investors?

Coca Cola HBC AG is currently among the stocks with the strongest six-month and one-year relative price strength in the market. But momentum on its own is no guarantee of future returns. 

To get a better idea about whether this momentum will continue, it's worth doing some investigation yourself. Indeed, we've identified some areas of concern with Coca Cola HBC AG that you can find out about here.