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A flood of views to a company's Wikipedia page may be a sign that their stock price is about to plummet.
That's the implication of a study published on 8 May in Scientific Reports, which looked at Wikipedia page view data from 2007 to 2012 and correlated it with changes in the stock market price for companies listed on the Dow Jones Industrial Average.
An uptick in the number of Wikipedia page views, as compared with the average weekly views, was followed by a fall in a company's share price.
The research suggests that Wikipedia pages, which can be edited by anyone, are part of the information-gathering process for financial transactions -- potentially useful knowledge for people wanting to play the system. "We were really intrigued by the idea that data from usage of Internet information resources such as Wikipedia might help us understand how traders gather information before making these decisions," lead author Suzy Moat, Senior Research Fellow at Warwick Business School, told Wired.co.uk. "The connection we find between views of Wikipedia pages and stock market moves suggests this may indeed be the case. This suggests that data on people's usage of online information services, such as Wikipedia or Google may be used to anticipate decisions they might later take in the real world."
Previous research has shown that the volume of financially-related searches on Google and also the
"mood" of tweets on Twitter can be linked to changes in the stock market. Big data approaches to real world trends have also shown links between web searches and flu infections.
The correlation with a fall in share price, rather than a rise, could be because of humans' risk-averse nature. A trader might consider a sale at a lower price than previously expected of greater consequence, and therefore spend more time researching that trade.
Furthermore, watching Wikipedia page views could be a useful tool for making financial decisions. Simple trading strategies based on changes in the frequency of views of a company's Wikipedia page would have led to profits of up to 141 percent higher than a random trading strategy, the researchers found. "In our strategy, we sold the [Dow Jones Industrial Average (DJIA)] if people had recently looked at a financially related page more than in earlier weeks, and closed the position a week later," explained Moat. "If people had recently looked at a financially related page less than in earlier weeks, we bought the DJIA and closed the position a week later."
Monitoring pages related to financial topics, such as macroeconomics and capital, would have generated profits of up to 297 percent.
The frequency of Wikipedia edits, as opposed to views, showed little or no correlation with stock market movements, probably because the same people who edit Wikipedia pages are not the same people who make decisions on the stock market.
The researchers also examined non-financial Wikipedia pages, such as pages about famous actors, and found no correlation.
Data about Wikipedia page views was gathered from stats.grok.se
Update 8/05/13 -- comments from study author added.
This article was originally published by WIRED UK
