Stock Price Analysis Using Sentiment Analysis
Stock Price Analysis Using Sentiment Analysis
Sentiment Analysis
Sreenath Vadlamudi, Monish Galla
Abstract:-
The issue of stock market forecasting is significant in the field of financial engineering, particularly because new
methods and perspectives are becoming more and more valuable. For a very long time, analysts and scholars have
been interested in the issue of forecasting stock market values. Because of their extreme volatility and dependence
on a variety of political and economic circumstances, a change in leadership, investor mood, and many other
reasons, stock values are difficult to forecast. It has been found to be insufficient to predict stock values just on the
basis of historical data or textual information. There is a significant association between the movement of stock
values and the release of news stories, according to previous research in sentiment analysis. At different levels, a
number of sentiment analysis research have been attempted utilising methods including deep learning, naive Bayes
regression, and support vector machines. The quantity of training determines how accurate deep learning algorithms
are. Since the Stock Market has existed, financial experts have tried to predict it. The sentiment analysis-based ML
method is currently being used and tested in the financial markets. Having the capacity to accurately predict trend
shifts is a seductive promise of wealth and influence for a financial expert. When things go out of control, stock
market issues and the challenges they raise easily make their way to the open creative mind. A vital purpose of this
study is to identify the best model to predict currency trading estimation.
Keywords: NLP, Sentiment Analysis, Vader Sentiment Analysis, Linear Discriminant Analysis.
There are various methods and tools that can be used for
sentiment analysis, including machine learning
algorithms and lexicon-based approaches like Vader
(Valence Aware Dictionary and Sentiment Reasoner).
Workflow
Collect data: Gather a dataset of news articles,
social media posts, and other sources of information figure -1 workflow[1]
related to the stock or stocks you are interested in.
Preprocess data: Clean and preprocess the data to Vader Sentiment Analysis
prepare it for analysis. This may include removing
irrelevant information, standardizing formatting, and Vader (Valence Aware Dictionary and Sentiment
so on. Reasoner) is a lexicon-based sentiment analysis tool
that is specifically designed to handle sentiment
Annotate data: Label the data with sentiment labels, expressed in social media. It is widely used for
sentiment analysis of text data, particularly in the
such as positive, negative, or neutral. This can be context of social media analysis.
done manually by humans, or you can use a pre-
trained sentiment analysis tool like Vader to
Vader uses a combination of dictionary-based and rule-
automatically annotate the data. based techniques to identify and extract sentiment from
text data. It includes a list of positive and negative
Build a model: Train a machine learning model words and emoticons, as well as a set of rules for
using the annotated data to predict stock market handling negations, punctuation, and other linguistic
movements. This may involve feature engineering, cues that can affect sentiment.
hyperparameter tuning, and other steps to improve
model performance. Vader is well-suited for sentiment analysis of social
media data because it is able to handle the informal and
Evaluate the model: Use evaluation metrics such as often abbreviated language used in these platforms. It
accuracy, precision, and recall to assess the is also able to take into account the intensity of
sentiment, allowing it to distinguish between strong
performance of the model and identify any areas for
and weak sentiment.
improvement.
VADER has a lot of advantages over traditional Linear Discriminant Analysis (LDA) is a
methods of Sentiment Analysis, including: dimensionality reduction technique that can be used
to project high-dimensional data onto a lower-
It works exceedingly well on social media
dimensional space while preserving the most
type text, yet readily generalizes to multiple
important information. It is a supervised learning
domains
method, which means that it takes a labeled dataset
It doesn’t require any training data but is
as input and uses this information to learn how to
constructed from a generalizable, valence-
project the data onto a lower-dimensional space.
based, human-curated gold standard
sentiment lexicon LDA is particularly useful for classification tasks,
It is fast enough to be used online with where the goal is to predict the class label of a given
streaming data, and data point. It works by finding the projection that
It does not severely suffer from a speed- maximizes the separation between the different
performance tradeoff. classes, so that data points from different classes are
as far apart as possible in the lower-dimensional
space.
TextBlob
LDA is closely related to Principal Component
TextBlob is a Python library that provides a simple
Analysis (PCA), which is another dimensionality
API for natural language processing tasks such as
reduction technique. The main difference between
part-of-speech tagging, noun phrase extraction,
the two is that LDA is a supervised method, while
sentiment analysis, and more. It is built on top of the
PCA is an unsupervised method. This means that
popular natural language processing library NLTK
LDA takes into account the class labels of the data fall. Since none of them are necessary for doing
points when finding the projection, while PCA does sentiment analysis,
not. As a result, LDA tends to perform better for
classification tasks than PCA. we now delete all of these columns, full stops, and
exclamation points from the text dataset. With the
Overall, LDA is a useful tool for reducing the exception of a-z and A-Z, we simply applied regular
dimensionality of data and for improving the expressions to all 25 news columns, replacing
performance of classification algorithms. It is everything else with blanks. Any special characters
widely used in a variety of applications, including will be automatically removed and replaced with
image recognition, text classification, and speech blank space if they appear.
recognition.
Converting all characters to small letters is a crucial
Methodology step because, whenever we try to build a count bag
of words or a TF IDF model, we must always keep
In Sentiment analysis, the economic news headlines in mind that these models will treat a word as
from each firm are labelled with the sentiment value having two different meanings if it begins with a
and polarity value that they represent. These data capital letter and appears in a different sentence with
allow us to do a variety of additional analysis and small letters. Although it is the same term, it was
comparisons. Comparing particular businesses to treated differently since only upper and lower case
their stock market prices during the time period existed. We are carrying out this step to address
influenced by economic news is the major focus. In these issues. Therefore, always ensure that all of
order to evaluate and show the emotional impact of your characters are in lower case. You may also
economic news headlines on stock market swings, convert all of your characters to upper case, but
and to determine the potential influence of headlines keep in mind that each and every character should
alone, without complete information be in an upper case that is comparable to the lower
case as well.
This dataset combines information from Kaggle's
stock price and global news. The data frame We complete all of the steps. Let's imagine you
includes 25 columns of the most important news need to make a prediction for tomorrow. You would
stories for each day, along with Date and Label use the top 25 news headlines, apply all the
(dependent feature). The data frame from 2000 to transformation techniques, and then feed the data to
2008 was removed from yahoo finance, and the data your model, which would essentially indicate if a 0
ranges from 2008 to 2016. The Dow Jones or 1 indicates a rise in stock price or not. This is
Industrial Average stock index is used as the basis how news headlines may be used for stock
for labels. sentiment research.
Class 0 – The stock price stayed the same or In this study, we employed a variety of sentiment
decreased. analysis algorithms to categorize and emotionally
assess various economic news headlines and
Label is the only dependent feature (goal value) in
investigate their effects on shifting stock market
our dataset; the other 26 characteristics are values even when the context was missing. The
independent. When we receive these 25 news stories standard positive, negative, and neutral categories of
and our label is 1, our stock price rises. We have
emotions were used to classify them. The outcome
this sort of dataset, and in order to solve this
of the prediction procedure makes it abundantly
problem, we're going to utilize NLP, sentiment
evident that we have acquired a correct value that
analysis, and forecast if the stock price will rise or
suitably corresponds to the current stock price. The
achieved accuracy is 89.8%.
analysis methods. By creating a platform
that
Future Scopes
incorporates several potential adjustments to
Improving the accuracy and robustness of TensorFlow into the existing model, that
sentiment analysis tools: There is still room may be developed into an intuitive format.
for improvement in the accuracy and
robustness of sentiment analysis algorithms,
particularly when it comes to handling
sarcasm, irony, and other forms of figurative References
language. Developing new techniques and
1. Sentiment Analysis for Effective Stock
approaches for accurately identifying
Market Prediction
sentiment in these situations could be an
2. Stock Trend Prediction Using News
important area of future research.
Sentiment Analysis
Incorporating additional sources of data: In
3. Stock Prediction Using Twitter Sentiment
addition to news articles and social media
Analysis
posts, there are many other sources of data
4. Stock Price Prediction using Sentiment
that could be useful for stock market
Analysis and Deep Learning for Indian
sentiment analysis, such as earnings call
Markets
transcripts, analyst reports, and company
5. STOCK TREND PREDICTION USING
financial statements. Developing approaches
NEWS SENTIMENT ANALYSIS
for integrating and analyzing these diverse
data sources could lead to more accurate and
comprehensive insights.
Exploring the use of deep learning and other
advanced machine learning techniques: Deep
learning and other advanced machine
learning techniques have achieved
impressive results in a variety of tasks and
may have the potential to improve the
performance of stock market sentiment
analysis algorithms. Exploring the use of
these techniques in this context could be a
promising direction for future research.
Developing more effective methods for
integrating and interpreting sentiment data:
Simply identifying the sentiment of a piece
of text is only the first step in the process of
understanding its implications for stock
market movements. Developing more
effective methods for integrating and
interpreting sentiment data in the context of
broader market trends and other factors
could lead to more valuable insights.
Future work may involve developing the
analysis further and possibly adding
additional features. The addition of
additional tools for contrasting stock market
forecasts made with various sentiment