Financial advisors seeking honest investor sentiment about specific publicly traded companies should look no further than social media.
To cut through the noise and do that properly, Quantheta LLC, a New York-based financial data analytics company, has developed a new web-based product. SentiQuant, which is currently available in Canada, extracts market sentiment from social media websites such as Twitter and StockTwits, a social media platform that collects posts specifically related to finance and investments.
SentiQuant also uses news sources to help advisors and investors determine which companies are striking the right chord with the general public and, therefore, may have success on the markets.
This type of information has an impact on stock prices, according to Patrick Houlihan, co-founder and CEO of Quantheta: “If you get an entire [group of people] chatting about [a company through social media], suddenly, it will hit [traders’] radars, they start trading it, they start the momentum and the whole flood starts to kick in.”
SentiQuant tracks more than 7,500 stocks covering multiple industries, sectors, exchange-traded funds and currencies. Anyone who uses the product can choose the particular stock, industry or sector he or she wants to learn more about and view a real-time social media dialogue regarding that choice.
The web-based platform also determines the amount of positive or negative social media momentum across sectors, industries or individual stocks through its heat maps. For example, if a heat map declares the financial services sector to be an intense shade of red, it means that it has been a negative day for social media talk regarding the sector.
A base version of SentiQuant offers predictive analytics using social media dialogue, news sources and Quantheta’s own proprietary analysis to determine the possible direction of a particular stock on the following day. For advisors looking for tips on what a stock may do over a longer period of time, the premium version will provide an idea of the stock’s movement over five days. However, predictive analytics is not meant to be a guaranteed indicator of how any stock will move, notes Houlihan.
SentiQuant, in both its base and premium versions, is available for a free two-week trial period. Following that period, both versions are available at a cost, which depends on whether the purchase preference is a monthly or yearly plan.