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Classification of Financial Events
Classification of Financial Events

April 14, 2023

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Financial events are pivotal in shaping market sentiment and influencing investment decisions. In finance, professionals and investors rely heavily on the latest news to keep abreast of changing market dynamics. The ability to quickly and accurately classify financial events can mean the difference between success and failure in the fast-paced world of stock market trading.

Artificial Intelligence can be used to interpret current news and tweets about an organization to help investors make informed decisions.

News/Tweets ∝ Stock Market

The impact of news and tweets on the stock market cannot be overstated. A single positive or negative event can trigger a chain reaction of buying or selling that can dramatically impact stock prices. News articles provide a succinct summary of recent events related to a company or the economy, as well as the potential effects that these events may have on market performance. Tweets communicate opinions about the steps taken by an organization among the general public. In this way, stock prices reflect not only a company’s current performance but also the market’s perception of its prospects.

A positive market sentiment regarding a company formed due to a good earnings report, an announcement of a new product, a corporate acquisition, and positive economic indicators can translate to its stock price rise. On the other hand, a bad earnings report, a lapse in corporate governance, big-picture economic and political uncertainty, and unfortunate occurrences could create a negative sentiment and can even see the company’s worth being wiped out in a day.

But the problem is not about where or how to find such news and tweets to read as you can easily find them published at sites like BusinessInsider, BusinessToday, Twitter, etc. The problem is that the sheer volume of financial events available can make it challenging for traders to identify and analyze relevant events promptly.

Discovering a reliable approach to navigating the seemingly chaotic stock market may offer investors more consistent and stable returns, thereby reducing the perception of the market as a form of gambling.

What is NLP and why use it for Market Analysis?

Artificial Intelligence(AI) has taken the world by storm. Its applications cover a wide variety of problems and one such application is Natural Language Process(NLP). NLP encapsulates a range of computational techniques for analyzing and representing naturally occurring texts at one or more levels of linguistic analysis to achieve human-like language processing for a range of tasks or applications. There are many helpful natural language tasks such as keyword extractionsummary generation, and sentiment analysis to extract relevant information from large texts and display it to the user in a concise manner.

Investing without thorough research can lead to a series of losses. Professional traders dedicate a significant portion of their time attempting to predict upcoming news cycles to execute stock trades in advance of official data releases.

Feeding data from government economic reports, company and industry news, market indicators, social media posts, etc., into NLP models, can help one to process huge amounts of events happening all around in less time and hence provide more time and information to investors to help anticipate and crunch down the numbers.

Financial events analysis includes three main tasks:

  • Event Detection: Sifting through a vast ocean of information and detecting what events are relevant, worth analyzing, and may provide viable data about a specific organization’s day-to-day working status.
  • Event Classification: Classifying events into appropriate finance categories. This step clusters the events talking about the same topic together so that the investors can check out events of the category that interests them.
  • Event Summarisation: When stock prices fluctuate with each passing moment, you need a short crisp summary of events to quickly and efficiently process the relevant information.

 

Conclusion

In conclusion, the ability to classify financial events quickly and accurately is crucial for success in the stock market.

Classifying events helps investors and analysts in identifying patterns and trends over time. By analyzing and categorizing events such as Mergers & Acquisitions, Investments & Joint Ventures, and Products & Services, etc., investors can gain insights into the potential impact of these events on the stock market.

NLP offers powerful tools and solutions for traders seeking to make informed investment decisions based on the latest financial news. By staying updated on relevant news and social media posts and analyzing them in real time, traders can improve their chances of achieving sustainable returns and minimizing the risks associated with stock market trading.


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