Overview
Relative valuation is a technique that is designed to help overcome the difficulties of producing an accurate valuation, particularly when using the discounted cash flow technique.
Relative valuation compares the asset in question to similar assets, which have a known price. Then it assigns a value to the asset which is close in some sense to the prices of the comparable assets. (typically, an average)
From a machine learning or statistics perspective, a relative valuation can be viewed as an instance of the nearest neighbor method.