S Score - Explained
What is the S Score?
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Table of ContentsWhat is the S-Score?How Does the S-Score Work?Measuring S-ScoreHow do we use S-Score?
What is the S-Score?
An S-Score refers to a numerical value showing how investors and consumers feel about a given company, sector, index, or stock as expressed in social media. Those who create S-Score use data they gather from the monitoring engines of social media. It helps investors make trades and assists firms with decision making and market analysis.
How Does the S-Score Work?
Market Analytics and New York Stock Exchange (NYSE) in 2013 created the very first S-Score so that it could be distributed to a global network with high-performance. The move focused on the sector of finance designed to benefit portfolio managers, trading firms, hedge funds, brokers, and risk managers. Besides the trademarked S-Score, the social market analyst offers S-Delta, S-mean, S-Buzz, S-Volatility, and S-Dispersion indicators. All these put together, they are called S-Factors that are used to track the change, volume, and dispersion of comments in social media. The system they use is capable of filtering out duplicate as well as irrelevant comments and spam. This way, they are able to focus on the 10 percent comments that provide them with meaningful and valuable information.
SMAs processing engine comprises three components: evaluator, extractor, and evaluator. According to SMA, the person extracting data can access the microblogging data and API web services of Twitter data aggregator GNIP. There is the polling of the sources in order to glean commentary, especially in tweets on stock covered by SMA. The process is done on a continuous process. During the evaluator stage, every single tweet is analyzed to enhance relevance in the financial market using propriety algorithms. During this process, the intend of the person tweeting is also determined, including their characteristics. In the calculator stage, there is a determination of sentiment signature for every SAM-covered stock. The process includes weighting and bucketing that is based on timing. There is then scoring and normalizing process that calculates S-Score. A significant positive sentiment is represented by an S-Score that is greater than +2. A negative one is that which is below -2. When it is above +3, it becomes extremely significant sentiment. That which is below -3, is taken to be very negative. We also have neutral sentiment, that falls between -1 and+1.
How do we use S-Score?
S-Scores helps investors to select stock. Note that when there are changes in the S-Score, change in stock price is also expected. So, the S-Score helps investors to make informed decisions when selecting stock in the market.