The 1 Year Absolute Strength measures the absolute percentage price performance of the share price over the past year. It is to be contrasted with Relative Strength. It is calculated as (Current Price minus Old Price) divided by Old Price x 100.
Absolute Strength is to be contrasted with Relative Strength where the percentage change is calculated and compared to the market or some other standard index. There is evidence to suggest that adding absolute momentum criteria on top of a relative momentum strategy can improve results.
This is because, in bear markets, stocks with high relative strength may still have low or even negative absolute momentum. After all, all a stock needs to do to have high relative strength is to perform a little better than everything else. Adding some absolute momentum criteria therefore, such as requiring that absolute momentum is positive, may be a useful addition to a momentum strategy.
Along with Dividends, the price performance is the other key component to determining Total Shareholder Return.