Twitter 'helps investors play the stock market'

There has been found to be a direct correlation between the number and variety of conversations happening in real-time about a company on Twitter, and the volume of trading on its stock. Researchers found that the more “connected components”, (different conversations about the same company or products relating to it), the better the stock price performed. For example, if Twitter users were tweeting about Mickey Mouse, Club Penguin and Disneyland, all of them would be counted as connected components of Disney and could affect the activity around its stock. Vagelis Hristidis, associate professor of computer science and engineering at the University of California, led the research and by using data which simulated conversations on Twitter, the team could better predict stock prices changes than other market indicators. The professor’s theory is that the volume of trading is affected by the variety of conversations happening about a company on Twitter – as they follow particular threads which become trends. Twitter processes a billions tweets a week and turned six years old last week. It is understood to have more than 500 million sign ups and around 140 million active users.