In today’s financial world, access to accurate, real-time data is a key factor in making informed decisions. Fintech solutions have transformed the way stock markets operate, providing new tools for analysis, including those focused on understanding investor sentiment. Sentimenti, a Polish-based company specializing in emotion analysis, has recently applied its advanced technology to analyze the emotions surrounding Polish stock market companies.
Sentiment Analysis in Stock Market Forecasting
In December 2018, the International Monetary Fund IMF published “Media Sentiment and International Asset Prices” analyzing Reuters and Bloomberg articles’ impact on stock indices. Key findings include:
- News sentiment correlates more strongly with bear markets.
- Sentiment is a better predictor of global indices than VIX (CBOE Volatility Index).
- Positive media sentiment influences developed markets positively but affects emerging markets negatively.
Unfortunately, these methods only achieve 55-60% accuracy, likely because they rely on emotional tags from social media.
Emotional monitoring for stock price forecasting
What if we combined media and emotion monitoring using deep neural networks? Sentimenti’s tools allow for the analysis of 11 emotional variables in texts (8 basic emotions). We track sentiment and specific emotions, measuring their intensity and changes over time. We then compare these findings with hard indicators, like the WIG-Banks index and company share prices.
Emotions on the Warsaw Stock Exchange
In late 2018, we tested our models with data from 50 Polish companies. Remarkably, in 87.1% of cases, changes in emotional intensity predicted stock price changes! Our report, featuring companies like CD Projekt and KGHM, details these findings.
Global Applications: Why Emotion Analysis is the Future
While this report focuses on the Polish market, the implications of emotion analysis are global. Financial markets around the world are increasingly influenced by the emotions and perceptions of investors, particularly in an age where information spreads rapidly across social media and online news platforms. Sentimenti’s technology provides a scalable solution for analyzing these emotions in any market, offering a competitive edge to investors and financial institutions.
By integrating emotion analysis into their decision-making processes, global financial institutions can anticipate market movements with greater accuracy. As fintech continues to evolve, tools like those developed by Sentimenti will become indispensable in navigating the complex emotional dynamics that shape modern financial markets.
Conclusion
Sentimenti’s emotion analysis technology is a powerful tool for understanding the emotional undercurrents driving stock market behavior. With its application in the Polish stock market, the company has demonstrated the value of emotional insight in financial decision-making. As markets become more volatile and influenced by real-time information, emotion analysis will play an increasingly important role in predicting market trends and helping investors make informed choices.