Monday, October 25, 2010

How Does Twitter Predict the Stock Market?

By William Alden / The Huffington Post 

In the latest effort to determine how exactly Twitter will help the world, a new study argues that the micro-blogging platform can predict movements in the stock market.

The report, authored by Johan Bollen, Huina Mao and Xiao-Jun Zeng, says that the degree of "calmness" of the Twitterverse can predict -- with 87.6 percent accuracy -- how the Dow Jones Industrial Average will move, two to six days before the movements occur (hat tip to the Awl).

To reach this conclusion, the researchers examined two already-existing Twitter "mood tracking tools": OpinionFinder, which measures positive versus negative mood, and Google-Profile of Mood States, which measures "six dimensions" of mood: alert, sure, vital, kind, happy and calm.

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