ChatGPT Can Accurately Predict Stock Movements Based On Article Headlines
According to a report from Bloomberg, ChatGPT can now foretell the fate of stocks based on article headlines. This has led to two studies to determine if it can determine whether stock-related headlines were favorable or unfavorable and if Federal Reserve pronouncements were aggressive or meek. The Chatbot passed both tests, highlighting how much text from news articles, tweets, and even speeches can be converted into trading signals.
The University of Florida’s Alejandro Lopez-Lira and Yuehua Tang prompted ChatGPT to pose as a financial professional in one of the studies. They then asked the chatbot to analyze business news articles from late 2021 since the chatbot’s training data didn’t cover the time after that. The study discovered a statistical relationship between the stock’s future movements and the replies provided by ChatGPT. This further indicates that the technology was able to comprehend the significance of the news accurately.
While it’s not new on Wall Street to use language models that underpin chatbots to guide several strategies, the results suggest that OpenAI’s technology can now understand subtlety and context at a higher degree than ever before. Slavi Marinov, head of machine learning at Man AHL, addressed the same and said, “It’s one of the rare cases where the hype is real.”
