Social Networks, Social Media

& Trading

EXTENT Conference April 14, 2012, Kostroma, Russia

Instead of an introduction

Source:http://kizzx2.com/blog/index.php/2011/01/18/why-we-shouldnt-care-too-much-about-being-right/

1.What is social media?2.What is a social network?3.Why does social media matter?4.Academic studies: quantification &

analysis5.Sentiment analysis & machine readable

news6.Corporate monitoring7.Q & A

Agenda

• What is Social Media?

Content is based on user participation and user-generated content, i.e. consumer-generated media:

•Facebook •Twitter •LinkedIn •Google Plus •Seeking Alpha •Covestor •StockTwits •Etc.

A variety of web-based platforms, applications and technologies that make it possible for people to interact with each other online

relationships and flows between people, groups, organizations, computers or other information or knowledge processing entities (nodes) the network consists of

• What is a Social Network?

a social structure made of individuals or organizations

• Why does social media matter?

era of social media dominance

Interactive nature

70% of businesses have social media presence (KPMG)

Facebook:

845 million monthly active users at the end of December 2011.

483 million daily active users on average in December 2011.

Available in more than 70 languages.

• Why does social media matter? Speed

A NY-based data analysis provider: detects emerging activities on Twitter by monitoring the normal flow of tweets, and observing any impending aberration;

alerts its clients

• Why does social media matter? Amplification

Photograph by Mark ThiessenSource:http://environment.nationalgeographic.com/environment/natural-disasters/wildfires/

• ACADEMIC STUDIES – Quantification & Analysis

Indiana University

Research done by Professor Johan Bollen in 2010 suggested that the analysis of tweets to gauge public moods could help to reveal stock market trends and movements.

This encouraged U.K. company Derwent Capital to create the so called Twitter Hedge fund, which during its first month of trading outperformed the established S&P 500 index.

Pace University

Can social media popularity reliably predict daily stock prices?

The number of Facebook fans, Twitter followers and Youtube views were used as measures: keyword search trend data was tracked against daily stock price movements relative to an index of consumer stocks

A correlation was found between daily popularity and stock price suggesting that social media popularity may be a lead indicator of stock price performance

Starbucks, Coca Cola and Nike, over the course of 10 months in 2010-2011

• ACADEMIC STUDIES – Quantification & Analysis

TUM School of Management, Munich

1)how does the content or information contained within stock micro-blogs reflect financial market developments?

2) are micro-blogging forums an efficient platform to weigh and aggregate information?

Using methods of computational linguistics

Analysis of ~ 250,000 stock-related micro-blogging messages (tweets) on a daily basis.

• ACADEMIC STUDIES – Quantification & Analysis

The sentiment of tweets is associated with abnormal stock returns and message volume to predict next-day trading volume.

Users providing above average investment advice are re-tweeted more often and have more followers (i.e. amplification!)

 

• ACADEMIC STUDIES – Quantification & Analysis

Purdue UniversityHow does peer-based advice transmitted through social media affect the stock market?

Textual analysis of articles published on Seeking Alpha.

Views expressed in articles associate strongly with current and near-future stock returns.

The effect is stronger for articles that receive more attention and for companies likely to be neglected by traditional advice sources.

The importance of social media as both a source of peer-based advice and a channel through which views become reflected in stock prices.

www.seekingalpha.com

 

• Sentiment Analysis

Companies apply complex algorithms to measure a variety of sentiment trends:

What is the mood of the entire consumer marketplace?

Are there positive or negative emotions / opinions regarding a specific brand or stock?

www.stocktwits.com

Some social media streams make it possible to gather such information real-time:

• Machine Readable News

Thomson Reuters News Analytics (TRNA) for Internet news and social media that allows users to analyze internet content, tag and filter that content to focus on the most relevant sources, and turn the data into actionable analytics to support trading by providing improved buy/hold/sell signals within milliseconds.

Powered by language processing system from linguistics technology provider Lexalytics, a software company specializing in text and sentiment analysis for social media monitoring and reputation management. By enabling organizations to make sense of the vast content repositories on sources like Twitter, blogs, forums, web sites and in-house documents, Lexalytics provides the context necessary for informed critical business decisions.

www.lexalytics.com - text analysis software

• Machine Readable News

www.lexalytics.com - text analysis software

www.lexalytics.com - text analysis software

• Machine Readable News

www.lexalytics.com - text analysis software

• Machine Readable News

• Corporate Social Media Monitoring

•Social Media monitoring technology

•Monitors social media platforms

•Use communication professionals to analyze search results

•Provide clients with reports

Clients include:

•BP

•Old Mutual

•LSEG – since January 2012

•Etc.

Social 360 - www.social360monitoring.com

• Questions & Answers

Thank you!

Source: http://i.zdnet.com/blogs/twitter-downtime-and-life-at-home.jpg