Thomson Reuters announced today it is adding a new social media sentiment analysis feed to its machine-readable news product. The service, which already gives users access to news from Reuters and about 50 third-party services, will now provide information from up to 50,000 news sites and four million social media sites.
Known as Thomson Reuters News Analytics, the company’s newsfeed service has long provided information to quantitative trading firms and other financial companies. The data can be plugged directly into computers for analysis of short-term and medium-term trades.
The additional service, which has been in beta testing for the past two months, delivers information from Moreover Technologies, an aggregator of global news and social media. The price of the add-on varies depending on how much data clients wish to collect.
This is the first time Thomson Reuters has offered a sentiment-scoring service for social media. The new capability will mine social media and blog content to deliver digestible analytics on selected companies and market segments.
Rich Brown, head of quantitative and event-driven trading solutions for Thomson Reuters, said the system looks at various characteristics, ranging from the sentiment or tone of an article or post, to how substantive it is on a given company, to how unique it might be.
Brown said understanding social media can be a key to grasping how a particular news event might impact a stock.
"Whether social media leads news, or news leads social media, the interaction of these two signals is something that’s particularly important," Brown said. "Does the story have more momentum? Is there more behind this particular idea than just a single story that maybe not everybody has seen?"
Social media sites analyzed by the system include everything from travel blogs to small-cap investor forums. The service does not, however, gather information from Facebook or Twitter.
"Tweets are hard to distinguish any true meaning from, because they’re of limited content," Brown said. "When we look at the more substantive content that’s available in this feed, we’re able to get a lot more context and draw the proper conclusions."
Though using social media in electronic newsfeeds is relatively new, having direct newsfeeds for trading programs has been gaining in popularity recently. According to data from Aite Group, 35 percent of quantitative firms are now using some kind of machine-readable newsfeed, up from 2 percent three years ago.
