Predicting stock price movements with news sentiment: An artificial neural network approach

Abstract

Behavioural finance suggests that emotions, moods and sentiments in response to news play a significant role in the decision-making process of investors. In particular, research in behavioural finance apparently indicates that news sentiment is significantly related to stock price movements. Using news sentiment analytics from the unique database RavenPack Dow Jones News Analytics, this study develops an Artificial Neural Network (ANN) model to predict the stock price movements of Google Inc. (NASDAQ:GOOG) and test its potential profitability with out-of-sample prediction.