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A novel stock recommendation system using Guba sentiment analysis

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Abstract

Investment recommendation has been one of the hottest topics in the finance area which can help investors to get more profits and to avoid loss. Existing recommendation systems mostly depend on analysis of trading data and company profit prediction. Though many works show that there is a positive correlation between investors’ sentiment and the finance market trends, few recommendation theories have been built based on sentiment. The primary reason is the difficulty to measure investors’ sentiment. In this work, a novel stock recommendation system is developed based on a proposed theory concerning the correlation between Guba-based sentiment of the retail investors and the stock market trends in China. To verify four hypotheses of the theory, a novel method is proposed to measure the investors’ sentiment by exploiting the large volumes of emotion enriched texts posted in Guba, which is online social platform for individual investors to share news and opinions concerning their favorite stocks. Results show the correctness of the proposed theory: (1) there is a positive correlation between Guba-based sentiment and the stock market trends; 2) the higher the post volumes and agreement, more proficiency the bullishness would be; and (3) a long-lasting negative Guba-based sentiment indicates the arrival of the bear market. The proposed recommendation system consists of three criteria accordingly to ensure the portfolio to meet requirements of the theory. Finally, experiments are implemented using the real data of Chinese stock market from March 2009 to March 2016 and the results show the effectiveness of the proposed system in recommending lucrative stocks and the theoretical cumulate profit is about eight times of the CSI300 in the period.

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Funding

This work is supported by National Natural Science Foundation of China under Grant NO. 61371185.

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Authors and Affiliations

  1. Business School, Beijing Normal University, Beijing, 100875, China

    Yunchuan Sun

  2. School of Mathematical Sciences, Beijing Normal University, Beijing, 100875, China

    Mengting Fang & Xinyu Wang

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  1. Yunchuan Sun
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  2. Mengting Fang
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  3. Xinyu Wang
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Correspondence to Yunchuan Sun.

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Sun, Y., Fang, M. & Wang, X. A novel stock recommendation system using Guba sentiment analysis. Pers Ubiquit Comput 22, 575–587 (2018). https://doi.org/10.1007/s00779-018-1121-x

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  • DOI: https://doi.org/10.1007/s00779-018-1121-x

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