1. Social Networks, Social Media
& Trading
EXTENT Conference
April 14, 2012, Kostroma, Russia

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

3. Agenda
1.What is social media?
2.What is a social network?
3.Why does social media matter?
4.Academic studies: quantification & analysis
5.Sentiment analysis & machine readable news
6.Corporate monitoring
7.Q & A

4. • What is Social Media?
A variety of web-based platforms, applications and technologies that
make it possible for people to interact with each other online
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.

5. m
• What is a Social Network?
relationships and flows
between people, groups,
organizations, computers
or other information or
knowledge processing
entities (nodes) the
network consists of
o

6. • Why does social media matter?
era of social Interactive
media nature
dominance
Facebook:
70% of
businesses 845 million
have social monthly active
media users at the
presence end of
(KPMG) December
2011.
483 million
daily active
users on
average in
December
2011.
Available in
more than 70
languages.

7. • 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

8. • Why does social media matter?
Amplification
Photograph by Mark Thiessen
Source:
http://environment.nationalgeographic.com/environment/natural-disasters/wildfires/

9. • 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.

10. • ACADEMIC STUDIES –
Quantification & Analysis
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

11. • 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
The sentiment of tweets is associated with abnormal
computational linguistics
stock returns and message volume to predict next-day
trading volume.
Analysis of ~ 250,000
stock-related micro- Users providing above average investment advice are re-
blogging messages (tweets) tweeted more often and have more followers (i.e.
on a daily basis. amplification!)

12. • ACADEMIC STUDIES –
Quantification & Analysis
Purdue University
How 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

13. • 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?
Some social media streams make it possible to gather such information
real-time:
www.stocktwits.com

14. • 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

15. • Machine Readable News
www.lexalytics.com - text analysis software

16. • Machine Readable News
www.lexalytics.com - text analysis software

17. • Machine Readable News
www.lexalytics.com - text analysis software

18. • Corporate Social Media Monitoring
Social 360 - www.social360monitoring.com
•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.

19. • Questions & Answers
Thank you!
Source: http://i.zdnet.com/blogs/twitter-downtime-and-life-at-home.jpg