Further to my recent post on social media in relation to financial matters, but quite different, is appears that a new British hedge fund in planning to track Twitter in order to attempt to predict the direction of the stock market.
The initiative appears to be based on a recent paper by the University of Manchester and Indiana University, which found that the frequency of certain emotional words could be used, with a high degree of accuracy (87.9%), to predict daily moves in stock markets, between two and six days later.
An exclusive deal has been signed with Dr. Xiao-Jun Zeng, a doctor of computer science at the University of Manchester, to research trading models.
Are you skeptical about how successful this will be? I don’t blame you, but I’m going to try and follow this up to see how well they do in the markets. Apparently the fund is set to start trading with an initial 25 million pounds. Stay tuned.



