Introduction
The Absolute Strength (AS) rating is a unique key metric in Deepvue. It is the simplest or purest measure of a stock's strength relative to all of the others in the database over a particular time period.
The Absolute Strength (AS) rating is different from the Relative Strength (RS) rating in that the RS rating is weighted, using a proprietary formula, depending on the period of time in question. Hence, the RS rating is a more comprehensive measure of a stock's strength.
Understanding the Absolute Strength Rating
The AS rating is a distinctive feature in Deepvue. This rating provides a concise overview of a stock’s performance, but with a unique emphasis on absolute price performance. By focusing on absolute price performance and ignoring weighting, it offers a raw, unfiltered view of a stock’s performance over a given period.
This can provide traders and investors with valuable insights that may not be immediately apparent when using other ratings or metrics.
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Just like the RS rating, the AS rating can also be used in conjunction with other metrics to provide a more exhaustive view of a stock's performance.
Real-World Application: Utilizing the AS Rating
In practical terms, a high AS rating signals that a stock has strong momentum based on its own historical and current performance.
On the contrary, a low AS rating indicates that a stock might not have sufficient strength, hinting at potential future underperformance irrespective of market conditions. Such stocks may be better avoided or considered for short selling.
The AS rating is versatile and can be used in combination with other metrics like the RS and AD ratings for a more holistic analysis of a stock's potential.
Diving into the Calculation of the AS Rating
The AS rating measures the absolute price performance (on a percentage basis) of a stock over a specified period of time.
AS = (Current price – Prior price)/Prior price x 100
For example, a stock with a 12-Month AS rating of 96 is outperforming 96% of the database over the past year.
Deepvue’s AS Ratings
- 1-Month: Provides insights into the very short-term absolute strength of a stock. Calculated the same as the Relative Strength (RS) Rating 1-Month.
- 3-Month: Offers a short-term view into a stock's inherent momentum and strength.
- 6-Month: An intermediate-term evaluation of a stock's absolute strength.
- 12-Month: Gives a long-term perspective of a stock’s absolute strength, crucial for long-term investment decisions.
Conclusion: Harnessing the AS Rating
In summary, the AS rating is a tool for investors and traders alike, empowering them to evaluate a stock’s absolute strength with precision.
By offering insights based purely on a stock's own performance metrics, it stands as a solid pillar for making well-informed investment and trading decisions.
A potential AS Rating-based Screen in Deepvue:
Frequently Asked Questions (FAQs)
