Application of Sentiment Analysis to Explore the Connection Between Public Sentiment and Stock Price Movement by Python

Abstract

This study aims to research the relationship between sentiments of public and the trend of the stock. Specially, it focuses on analyzing how positive or negative sentiment correlated to the trend of stocks. In methodology, this research investigates the predictive power of public sentiment on stock market trend by analyzing users comments on Reddit by utilizing Python Reddit API Wrapper (PRAW) to systematically web-scrape relevant financial discussion from a subreddit called stocks. After the data collecting, preprocessing step is conducted to removing noise and standardize text. Eventually, sentiment analysis is applied to analyze the sentiments of comments by using Natural Language Processing (NLP) techniques. This approach allows for an in-depth examination of the correlation between the sentiments expressed in Reddit comments and subsequent stock price fluctuations by comparing the outcome and the actual price movement. Eventually, through the comparison between the sentiment analysis result and actual stocks movement, the sentiment of public comments shares the same trend with the market movement.