Correlation between Stock Price and News Reports

 There is a well-known relationship between stock prices and news reports, although it can be complex and influenced by various factors. News reports can impact stock prices by providing new information that affects investors' perception of a company's value or its future prospects. Here are a few ways in which news reports can correlate with stock prices:

1. Earnings Announcements: When a company releases its financial results, positive or negative surprises in earnings can significantly impact stock prices. Positive earnings reports often lead to an increase in stock prices, while negative reports can cause a decline.
2. Merger and Acquisition News: News of mergers, acquisitions, or partnerships can affect stock prices. If a company announces plans to merge with another company or acquire a competitor, it can create positive sentiment and drive up stock prices.
3. Product Launches and Innovations: News about new products or innovative developments can influence stock prices. Positive news, such as a successful product launch or a breakthrough innovation, can generate optimism and increase stock prices.
4. Regulatory Changes and Legal Issues: News reports related to regulatory changes, lawsuits, or other legal issues can have a significant impact on stock prices. Negative news, such as a regulatory crackdown or a lawsuit against a company, can lead to a decline in stock prices.
5. Macroeconomic News: Broader economic news, such as changes in interest rates, inflation, or GDP growth, can affect stock prices. Economic indicators and government policies can shape market sentiment, impacting the overall direction of stock prices.

It's important to note that the relationship between news reports and stock prices is not always straightforward. The interpretation of news can vary among investors, leading to different reactions and market fluctuations. Additionally, stock prices are influenced by a range of other factors, including market sentiment, investor behavior, and overall market conditions. Therefore, while news reports can have an impact on stock prices, it's essential to consider a wide range of factors when analyzing the correlation between the two.

How does it relates to my trading strategy? I think I still need to confirm this by creating a sentiment analysis program and visualize the results against the stock movement of a given day. I am planning to get data from twitter and Finviz. I will use the following youtube video as my guide to create the Sentiment Analysis program. And once confirmed and established, the outcome can make a 5% impact on my trading decisions.