Spectrum casts new light on FTSE 100 firms

UK-- A new tool has been launched to track sentiment in online buzz about FTSE 100 companies.

The Fin-buzz tool trawls samples of online coverage of all FTSE 100 companies every two hours, four times in each trading day, and uses text-mining technology to find positive and negative emotional content in the data. The results can then be compared with share prices and other market data in real time.

It has been developed by new company Spectrum in conjunction with statisticians from the University of Hertfordshire.

Company founder Mark Westaby – who previously set up media analysis firm Metrica – said Spectrum chose to focus on FTSE 100 companies for its first product because publicly available share prices provide a real time measure of company value, which sentiment metrics can be easily tied to.

He told Research: “It's a fantastic showcase. We can do analysis with very high levels of confidence that demonstrates the relationship between sentiment and value. Also, it's always better to be able to relate the data you're creating to an output, so with share prices that are publicly available, that makes it doubly useful to people.

“I don't think there could be a better time to do it. Who would have thought 18 months ago or even a year ago that you'd be looking at problems like the banks have had, for instance? So we feel the time is absolutely right.”

Westaby believes the automated sentiment analysis behind the Fin-buzz tool is superior to human analysis. “Humans are very inconsistent, whereas automated analysis is 100% consistent,” he said. “We're not claiming it gives you 100% accuracy, but neither do humans. It certainly gives you much better analysis, and if you're doing real time analysis then it's really the only way.”

He also sees plenty of potential for the technology to be put to other uses. “The web is just like a gigantic focus group. We'll be applying the same technology to all aspects of understanding sentiments – consumers, businesspeople, students, you name it,” he said.

Author: Robert Bain