We know researchers are using Twitter to predict and track illnesses. And it can even tell us which places appear to be the most angry (based on large-scale tweet data sentiment analysis), but one professor thinks it can also be used to predict the stock market.
And he just won a patent that brings him one step closer to making this thought a reality.
What Bollen found is that these moody tweets can be used to peer into the near-future, as indicators of what could happen socioeconomically or financially.
The first test tied tweets to the Dow Jones industrial average. Bollen’s research with doctoral student Huino Mao claimed close to 90 percent accuracy in predicting the stock’s short-term changes. When people seemed calm, the Dow went up. When they became anxious, it sank.
Bollen is also part of a data research project called Truthy. It “helps you understand how memes spread online.”
We collect tweets from Twitter and analyze them. With our statistics, images, movies, and interactive data, you can explore these dynamic communication networks.
It appears to be a work in progress and not super useful to those already schooled in “online,” but maybe it will prove valuable to others.
Based on Truthy though, we’re guessing that predicting the stock market based on Twitter “mood” is a quite a way off.
Would you base a stock buy on Twitter sentiment analysis?
(Patent image from Shutterstock)