A recent study has revealed that ChatGPT, a highly advanced AI chatbot, possesses remarkable proficiency in predicting stock market trends with great accuracy. Consequently, this has prompted speculation about the possibility of artificial intelligence models replacing human investment analysts in the coming years.
The study conducted by professors at the University of Florida discovered that the chatbot exceeds traditional sentiment analysis techniques in performance. “ChatGPT outperformers traditional sentiment analysis methods,” it said.
According to the paper, integrating advanced language models like ChatGPT into investment decision-making may result in more precise forecasts and improved quantitative trading strategy performance.
To evaluate the predictive capabilities of the OpenAI chatbot, the professors fed over 50,000 news headlines concerning specific companies that dated back to October 2021. Subsequently, they posed questions to ChatGPT on whether the headlines would have a positive, negative or no impact on the firm’s stock prices.
Utilizing sentiment analysis, the chatbot produced a unique scoring metric called the “ChatGPT score.” This score was subsequently analyzed to assess its predictive power on the stock market performance of analyzed companies on the following day.
The research revealed a noteworthy constructive relationship between the ChatGPT scores and the subsequent day’s stock performance for the selected enterprises. Higher scores correlated with better returns, while lower scores correlated with lower returns.
Researchers discovered that conventional models failed to offer any extra predictive capacity in comparison to ChatGPT-based sentiment scores. These outcomes suggest that ChatGPT presents a potential opportunity for investors who aspire to forecast forthcoming stock market patterns.
In a recent interview with Fortune Magazine, the researchers highlighted the potential transformation that ChatGPT and other comparable AI models could bring to different finance subsectors, namely asset management, stock trading, investing, and finance regulation. While the chatbot failed to recognize the negative implications of a headline regarding executives selling their stock, the researchers remain optimistic about AI’s future in the finance industry.
Via Yahoo Finance