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A question that seems to interest equally brokers and traders is “How do the markets feel today?”, with the answer increasingly provided by innovative sentiment analysis tools. Delving into the wisdom of the crowd and making sense of tremendous amounts of data, such tools have long been affordable to institutional-scale investors only but are now spreading to a wider clientele.
Interactive Data, the US specialist in financial information and infrastructure services, is riding the wave of interest into these financial market sentiment tools by partnering with German company Sowa Labs.
Thanks to the partnership, announced earlier this week, clients of Interactive Data will have access to Sowa Labs’ social media analytics feed. Through Interactive Data’s cloud-based platform, clients will be able to tap collective wisdom for the most trending topics on social media, as well as get information about a certain stock, currency or other securities. In addition, users of Interactive Data’s cloud-based solution will have the opportunity to provide social media sentiment indicators to their website visitors. The latter will be able to gain valuable insights into what is most searched today or which security is most traded.
Commenting on the rationale for the new offering, Interactive Data Managed Solutions’ president Joachim Lauterbach said: “Sentiment analysis has become an important source for investment professionals to assess financial markets and stocks, and we observe that it is increasingly influencing the investment decision-making process”.
Although the business case for the tie-up seems solid, a note of skepticism may be voiced at this point. Neither of the two companies explains how it will overcome the biggest problem about market sentiment indicators derived from social media analysis, namely the fact that major market players and decision-makers do not share openly their opinions on social networks. It could be that Sowa’s algorithms are not covering these major players at all…
This is the second partnership between Interactive Data and Sowa Labs in the area of analysis of huge amounts of information. The two companies worked together on FIRST, a project supported by the European Union, addressing problems related to real-time dealing with loads of heterogenous information in financial markets.
The full announcement on the partnership between Interactive Data and Sowa Labs can be downloaded here.