Traditionally, stock prices were analyzed by studying past trends—numbers like how much a stock was sold for yesterday or how many shares were traded. But numbers don’t tell the whole story. The stock market is as much about feelings as it is about facts.
Think about it:
- A positive news article about a company’s success can make people feel optimistic and buy its stock.
- A negative tweet about a scandal can make investors panic and sell.
Understanding these emotions, or sentiments, could be the missing piece of the puzzle in predicting stock prices. How, we at ODA achieving this:
Step 1: Gathering Stories and Numbers
The team collected two types of data:
- The Numbers: Historical stock prices—open, close, high, and low prices.
- The Stories: News articles and reports about the companies, which were analyzed to figure out whether they expressed positive, negative, or neutral feelings.
Step 2: Teaching the AI to Listen
The AI model used was like a storyteller with a sharp memory. It remembered patterns in numbers (stock prices) and listened to the emotions in the news (sentiments). This combination helped it understand how stories in the media influenced the numbers on the stock chart.
Step 3: Making Predictions
Once the AI had learned these patterns, it began predicting what might happen next:
- Would a company’s stock price go up after glowing media coverage?
- Would bad press drag its price down?
The Results: Better Predictions
By blending the emotions in news stories with historical stock data, the AI became smarter. It was better at predicting price movements compared to models that only looked at numbers.
This hybrid approach worked especially well during volatile times—when emotions ran high, like during major announcements or crises.
A Peek into the Future
Potential Impacts of this Innovation:
- Traders have AI-powered apps that read the market’s mood and suggest when to buy or sell.
- Companies use AI to understand how public sentiment affects their stock performance.
- Individual investors, even beginners, get access to smarter tools that help them navigate the market.
Who knows? The next time you read a headline about your favorite company, you might also be getting a hint about its future stock price.
What do you think about using AI to understand and predict your financial data? Is it the future of investing? Let’s discuss- Drop us an email on info@optimumdataanalytics.com
