The Impact of the Absolute Method, Relative Method, Moving Average, and Relative Strength Index on Investment Decision-Making

Abstract

A dynamic economic environment presents various risks, particularly in investment activities. Therefore, investors require reliable information and analytical tools to support effective investment decision-making. This study aims to examine the use of the Absolute Method, Relative Method, Moving Average (MA), and Relative Strength Index (RSI) in evaluating stocks before making investment decisions. This study employed descriptive and exploratory approaches using secondary data collected through documentation techniques. The population consisted of energy companies listed in the LQ45 Index, and the sample was determined using a saturated sampling technique involving seven companies. Data were analyzed using descriptive statistical methods. The findings based on the Absolute Method indicate that ADMR, ADRO, ITMG, PGAS, and PTBA are categorized as undervalued stocks, while AKRA and MEDC are classified as overvalued stocks. Based on the Relative Method, ADRO, MEDC, and PGAS are identified as undervalued, whereas ADMR, AKRA, ITMG, and PTBA are classified as overvalued. Furthermore, the Moving Average and RSI analyses show that, on average, energy companies are positioned below the MA line, which is consistent with RSI signals and provides useful indications for investment decision-making.