For any investor looking to diversify their portfolio or understand the current market sentiment for a particular stock, understanding what people are saying about it can be very useful. But with so much information circulating across social media platforms, it can be difficult to analyse and interpret it in an effective way.
This is the problem social media sentiment analysis was created to solve. In this article, we'll explore why it's important to do a social media sentiment analysis for stocks and how to do one.
What is Social Media Sentiment Analysis?
Social media sentiment analysis is a process of analysing the contents of social media posts in order to understand the sentiment of the public in regard to a particular subject. This process can be used to analyse stocks, news stories, events, products, companies, and more stock sentiment features.It involves using machine-learning algorithms to understand the text in social media posts in order to determine the overall sentiment of what is being said.
Why Do a Social Media Sentiment Analysis for Stocks?
With so much information circulating on social media platforms, it can be difficult to fully understand the current sentiment for a particular company and its stock.
Doing a social media sentiment analysis can help to provide an objective overview of how people are feeling about the stock and can be used to inform investment decisions.
Additionally, by understanding the conversations around the stock, investors can identify potential risks or opportunities that may be under-the-radar.
Where To Find Social Media Information for Stocks
When it comes to finding social media information for stocks, there are several platforms to explore.
Twitter is a great starting point as it has millions of users across the world and is one of the most active social media platforms. It can be an invaluable resource for social media sentiment analysis.
By harvesting tweets from a topic of interest, one can assess how people feel about it by counting the number of positive and negative tweets and analysing the language used in the tweets. For example, sentiment analysis of tweets about a particular stock can give you an idea of how positively or negatively people feel about it.
For example, sentiment analysis of tweets about a particular stock can give you an idea of how positively or negatively people feel about it. Twitter can also be used to trace the spread of certain topics by tracking the number of users discussing it and seeing how quickly it spreads.
Additionally, Twitter can be used to identify power users or people who have significant influence over discussions to make sense of the patterns in the data.
Reddit is a great platform for conducting social media sentiment analysis. To start, search for subreddits related to the topic of interest. Next, consider broader related communities and trends if a direct subreddit does not exist. After narrowing down the scope of the search, review the comments for sentiment analysis.
Additionally, digging deeper into the content of the discussion can provide valuable insights into the consumer mindset, allowing for data-driven business decisions.
StockTwits is an excellent tool for social media sentiment analysis. The platform allows users to track, monitor, and analyse sentiments among the stock market conversation on social media.
To get started, users can search for a stock ticker or company name, and they will be sent to a discussion page with conversations and opinions about the company. On the left panel, users can view all the conversations on the stock and also track user sentiment over time. In addition, they can click on the "Heat Map" section to view the stock sentiment in real-time and use the insights to make informed investment decisions.
Moreover, users can customize the data by searching for specific keywords or phrases. StockTwits clearly makes tracking and analysing sentiment around stocks easy and therefore is an invaluable tool for social media sentiment analysis.
How to Gather Social Media Data For a Stock Analysis
It is necessary to have programming skills to extract social media sentiment data on large scales from platforms. The main techniques used for this are API scraping and web scraping.
API scraping is a great way to collect data that can be used for data analysis if the source offers API access, as Twitter does. To scrape the Twitter API, the first step is registering with the Twitter Developer Platform and obtaining an API key. Once authentication is set up, several methods and endpoints are available to scrape Twitter data via their REST API.
The Twitter API allows users to access tweets, profiles, and other data from the Twitter platform, and allows users to search for tweets with specific terms and properties.
Web scraping is a method to extract data from websites which don't offer an API or way to access the data in a structured manner.
To gather data from a website such as a messaging board example, one requires knowledge and technical skills to do it successfully. First, it is necessary to set up a script to scrape, which would automatically identify and collect the data needed, taking note of the parameters and obeying any request limits of the website.
Once the script is active, working and tested, it is necessary to clean the data to ensure that the data that you have retrieved is tidy and usable. Furthermore, it is necessary to maintain the script in case the website ever changes.
Do You Have to Gather and Analyze Social Media Sentiment Data Yourself?
No, you do not need to gather and analyse the data yourself. External social sentiment analysis tools such as Stockgeist.ai's market sentiment monitoring platform can be used to collect and analyse data regarding public opinion, emotions, attitudes, and other relevant information related to stocks and cryptocurrencies.
Stockgeist also offers a visual dashboard and search functions to help you monitor, organise, and analyse large volumes of data to gain useful insights about trending stocks.