Does Twitter Affect Stock Market Decisions? Financial Sentiment Analysis During Pandemics: A Comparative Study of the H1N1 and the COVID-19 Periods

Abstract

Investors are constantly aware of the behaviour of stock markets. This affects their emotions and motivates them to buy or sell shares. Financial sentiment analysis allows us to understand the effect of social media reactions and emotions on the stock market and vice versa. In this research, we analyse Twitter data and important worldwide financial indices to answer the following question: How does the polarity generated by Twitter posts influence the behaviour of financial indices during pandemics? This study is based on the financial sentiment analysis of influential Twitter accounts and its relationship with the behaviour of important financial indices. To carry out this analysis, we used fundamental and technical financial analysis combined with a lexicon-based approach on financial Twitter accounts. We calculated the correlations between the polarities of financial market indicators and posts on Twitter by applying a date shift on tweets. In addition, correlations were identified days before and after the existing posts on financial Twitter accounts. Our findings show that the markets reacted 0 to 10 days after the information was shared and disseminated on Twitter during the COVID-19 pandemic and 0 to 15 days after the information was shared and disseminated on Twitter during the H1N1 pandemic. We identified an inverse relationship: Twitter accounts presented reactions to financial market behaviour within a period of 0 to 11 days during the H1N1 pandemic and 0 to 6 days during the COVID-19 pandemic. We also found that our method is better at detecting highly shifted correlations by using SenticNet compared with other lexicons. With SenticNet, it is possible to detect correlations even on the same day as the Twitter posts. The most influential Twitter accounts during the period of the pandemic were The New York Times, Bloomberg, CNN News and Investing.com, presenting a very high correlation between sentiments on Twitter and stock market behaviour. The combination of a lexicon-based approach is enhanced by a shifted correlation analysis, as latent or hidden correlations can be found in data.

Feverish sentiment and global equity markets during the COVID-19 pandemic

“…This study also found stronger effects on institutional investors than individual ones. Valle-Cruz et al. (2021) The Twitter data (the content of COVID-19) and important worldwide financial indices were used to examine whether they exhibit the relationship or not.…”

The Influence of Covid-19 Crisis on Social Media Companies Stock Prices

“…The COVID-19 crisis has created an unstable environment that has changed the sate of stock market aroung the world. Some authors compare the situation on the stock market with the effects of the H1N1 [5] from 11 years ago. The devastation in the global economy caused by the pandemic is shown on a scale not seen since the Great Depression [6], and thateven the Spanish flu did not have as much of an impact on the US stock market as COVID-19 [7].…”

Applying LSTM for Stock Price Prediction with Sentiment Analysis

“…Recent studies indicate that one of the main factors responsible for the variation in stock prices on the stock exchange is news related to the respective proprietary companies [6], [7], [8]. Adding more elements to the analysis is extremely important to build a balanced portfolio, and the sentimental analysis of the news shows positive results even during the COVID-19 [9] pandemic, a fact that destabilized the economy on a global scale and made the equity investment environment absolutely unstable.…”