April 4, 2011
Twitter Analysis Provides Stock Predictions
Economists at the Technical University of Munich (Technische Universitaet Muenchen, TUM) have developed a website that predicts individual stock trends. To this end, economists are using automatic text analysis methods to evaluate thousands of daily Twitter microblog messages, so-called "tweets". On www.TweetTrader.net, current forecasts are available for all S&P 500 listed stocks.
The share price of a stock reflects investor and analyst opinions about its prospects and indicates whether positive or negative developments are on the horizon. The micoblogging platform Twitter has become an important medium for the exchange of such viewpoints. Thousands of stock-related messages are broadcasted every day via Twitter. Twittering investors mark tweets according to company stock symbols, for example, "$AAPL" for the U.S. computer company Apple.
The TUM economist Timm Sprenger explains, "If a Twitter user often gives good stock recommendations, he will, as a rule, have more followers and will be 'retweeted' (i.e., quoted) more often by other users. Hereby, tweets with good recommendations are affirmed and receive greater weight in the overall analysis."
The study was the basis for the development of the website TweetTrader.net where the real-time sentiment for individual stocks can be accessed.
On the Net:
Stock Microblogging Forum TweetTrader: http://tweettrader.net/
The TweetTrader-Studie is available at the Social Science Research Network (SSRN): http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1702854