Novel Trading Signals Visible

Impact of media narrative extends beyond publication date

January 24, 2014. Davos, Switzerland - The narrative in opinion-leading media generates trading signals that can have value well beyond the date of publication, a study first presented during the World Economic Forum by Awareness Metrics LLC shows. As high-speed trading using real-time data dominates the financial markets it remains critical to understand how non-financial information shapes market expectations.

“While standard sentiment analysis is critical to intra-day algorithmic trading engines, then has little to no value afterward, this topic-focused analysis appears to generate trading signals that retain value even after the general public has seen the news,” said Fred Federspiel, founding Partner of Awareness Metrics.

“In our tests of Awareness Metrics data, we are excited to find signals that can help us understand how prices are likely to evolve several weeks after a signal is detected. Information like this will help us optimize long-term trading schedules for our institutional trading customers,” reported Henri Waelbroack, Director of Research at New York-based Portware LLC.

In an era of limited attention and information overload, behavioral finance and agenda-setting theory are generating new results regarding information awareness thresholds for the broader public. While measureable news on financials is priced into the market almost immediately, narrative information (e.g., the emergence of a consistent story about the customer experience) takes longer to be processed. Here, the awareness threshold and clear direction of tone are decisive factors.

“We have seen that it takes time for both consumers and financial analysts to make up their minds on new products, and the media plays a key role in forming those expectations,” says Matthias Vollbracht, founding Partner of Awareness Metrics. “BMW’s Mini sales have been a good example of how expectations are formed over time.”

The study analyzed two years of influential print and television media that was hand-collected by analysts at Media Tenor International. Every piece of information meeting the Media Tenor objective relevance criteria was assigned, among other data collected, a protagonist, topic, time reference, source, and sentiment.

The results of the study with be discussed at the Media Tenor Reputation Lab on January 25 at 10 a.m. CET in the rotary room of the Steigenberger Belvedere. 

About

Awareness Metrics LLC has offices in NY and Bonn, delivering data feeds and reports leveraging data from Media Tenor International, the leading media content analysis institute based in Switzerland.

Contact: Racheline Maltese, This email address is being protected from spambots. You need JavaScript enabled to view it., +1.646.263.3731