Twitter can provide a wealth of information for investors – but it can be difficult to figure out the difference between what’s worth paying attention to, and what’s just chatter.
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That’s where the founders of Social Market Analytics saw a window of opportunity.
“What we do is provide investors with actionable, meaningful intelligence on publicly traded securities based on social media inputs,” like Twitter, said Social Market Analytics CEO Joe Gits in an interview with FBN’s Jeff Flock.
The company’s proprietary software targets financial professionals and people in-the-know to find out what they’re saying on social media that could potentially indicate movement for a stock.
Gits says they use this information to create an “S-score,” which is a “normalized representation of current activity. So, the S-score is standard deviations from a normal baseline.”
In the digital age, on any given day a public company might be “talked” about a certain amount or in a certain way across social media platforms. The S-score shows significant changes – and aims to help investors predict what might be coming around the corner for these companies.
“We approached the problem from the same avenue that we did when we were building trading systems and when we were building analytical software. So, we sat down and said, ‘OK, how would we look at this data if we were building a trading model?’” said Gits.
“So, we really put the statistical rigor behind it that we did in our past,” he says.
And it looks like the work is paying off for the company. Having launched just a couple years ago, Social Market Analytics is now partnering with the NYSE to bring hedge funds and money managers quick access to Social Market’s data.