2010-11-15

Stock Market Prediction based on Google Searches

Stock market prediction - Wikipedia, the free encyclopedia

Stock market prediction is the act of trying to determine the future value of a company stock or other financial instrument traded on a financial exchange. The successful prediction of a stock's future price could yield significant profit. Some believe that stock price movements are governed by the random walk hypothesis and thus are unpredictable. Others disagree and those with this viewpoint possess a myriad of methods and technologies which purportedly allow them to gain future price information.


 Google searches predict stock market moves



(CNN) - Economics, in a broad sense, is the study of how the financial decisions of billions of individuals coalesce into large trends that shape the way money is created, destroyed or transferred around the globe.

In that vein, physicists in Germany and the U.S. have released a study that shows how individual searches on Google correspond to large movements on the stock market.

The joint study by researchers at the Johannes Gutenberg University in Germany and the Center for Polymer Studies at Boston University looked at the stock moves of S&P 500 companies and compared them with searches of the company names on Google Trends from 2004 to 2010.


Can Google Predict the Stock Market? - ScienceNOW

[...] To predict the market, you need data on what is going through people's minds before they make their financial decisions. One such source of data is the total weekly volume of Internet search queries, now available to researchers through Google Trends. 
Researchers led by Preis compared the week-by-week fluctuations in two sets of data: The number of times that the name of a company in the S&P 500 was included in a Google search query, and the price and trading volume of that company's stock. They focused on the 6 years from 2004 to 2010.

The findings, to be published 15 November in Philosophical Transactions of the Royal Society A, aren't going to make anybody rich. The Google data could not predict the weekly fluctuations in stock prices. However, the team found a strong correlation between Internet searches for a company's name and its trade volume, the total number of times the stock changed hands over a given week. [...]


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