Sentiment analysis, also known as opinion mining, is a computational technique used to determine the sentiment expressed in a given piece of text. The purpose of sentiment analysis is to extract personal information, such as positive, negative, or neutral sentiments, and quantify the overall sentiment conveyed by the text. In predicting stock market movements, sentiment analysis helps gauge investor sentiment and market trends.
Changes in stock prices are influenced not only by financial factors but also by the public’s perception of the market’s companies, the brand’s reputation among customers, and other factors.
As a result, sentiment about a company in the media, reports on the industry, reviews on social media, or investor opinions can provide valuable insights into how stock prices fluctuate.
Social media perceives that investors’ feelings and opinions assume a huge part in molding the financial market. Analysts can quantify and capture these sentiments using sentiment analysis, gaining insight into investor behavior and decision-making processes. Market participants can identify potential market trends and make informed investment decisions by understanding investor sentiment .
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1. Social Media Sentiment Analysis
On social media, people express their opinions about companies, which can have an impact on stock prices. The sentiment of investors and the prices of the market are linked in such a way that when these opinions are positive, stock prices tend to rise. Therefore, sentiment analysis can provide valuable insights into the stock market’s future by examining investor opinions.
2. Financial Report Analysis
Sentiment analysis can
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