ChatGPT Can Now Predict Stock Moves From Article Headlines
Artificial Intelligence (AI) has been advancing rapidly, and ChatGPT is one of the tools that has been pushing the boundaries of what is possible with AI. ChatGPT can do amazing things, from passing exams to threatening several jobs, and according to a new report, it can now predict stock moves from article headlines.
Bloomberg's report on ChatGPT stated that the AI tool can predict the fate of stocks based on article headlines. ChatGPT was used to perform market-relevant tasks, and two studies were released with this regard. One of the studies was used to determine if Federal Reserve pronouncements were aggressive or meek, and the other to determine whether stock-related headlines were favorable or unfavorable. The AI chatbot cleared both the tests, indicating that a lot of text from news articles, tweets, and even speeches could be converted into trading signals.
The University of Florida conducted a study on ChatGPT titled "Can ChatGPT Forecast Stock Price Movements? Return Predictability and Large Language Models." Researchers Alejandro Lopez-Lira and Yuehua Tang asked ChatGPT to act as a financial professional and analyze business news articles. ChatGPT was able to accurately understand the significance of the news and discovered a statistical relationship between the stock's future movements and the analysis provided by ChatGPT, even with news from late 2021 that was not covered by the AI's training data.
An example from the study shared by Bloomberg showed that "Rimini Street Fined $630,000 in Case Against Oracle" was positive for Oracle because the penalty "could potentially boost investor confidence in Oracle's ability to protect its intellectual property and increase demand for its products and services."
It is worth noting that analysts on Wall Street have been using the same language models that underpin ChatGPT to guide various strategies. However, the results suggest that OpenAI's technology is now capable of understanding context and subtlety at a higher degree than ever before. Slavi Marinov, head of machine learning at Man AHL, acknowledged this and stated, "It's one of the rare cases where the hype is real."
DISCLAIMER: This article does not provide financial advice, nor do we claim to be financial advisors. All investments are solely your own decisions. It is essential to conduct your own research and seek advice from a licensed financial advisor.
