News analytics

News analysis refers to the measurement of the various qualitative and quantitative attributes of textual (unstructured data) news stories. Some of these attributes are: sentiment, relevance, and novelty. Expressing news stories as numbers permits the manipulation of everyday information in a mathematical and statistical way.

News analytics are used in financial modeling, particularly in quantitative and algorithmic trading. They are usually derived through automated text analysis and applied to digital texts using elements from natural language processing and machine learning such as latent semantic analysis, support vector machines, "bag of words" among other techniques.

Applications & Strategies
A large number of companies use news analysis to help them make better business decisions. Academic researchers have become interested in news analysis especially with regards to predicting stock price movements, volatility and traded volume. Provided a set of values such as sentiment and relevance as well as the frequency of news arrivals, it is possible to construct news sentiment scores for multiple asset classes such as equities, Forex, fixed income, and commodities. Sentiment scores can be constructed at various horizons to meet the different needs and objectives of high and low frequency trading strategies, whilst characteristics such as direction and volatility of asset returns as well as the traded volume may be addressed more directly via the construction of tailor-made sentiment scores. Scores are generally constructed as a range of values. For instance, values may range between 0 and 100, where values above and below 50 convey positive and negative sentiment, respectively. Based on such sentiment scores, it should be possible to generate a set of strategies useful for instance within investing, hedging, and order execution.

Absolute Return Strategies
The objective of absolute return strategies is absolute (positive) returns regardless of the direction of the financial market. To meet this objective, such strategies typically involve opportunistic long and short positions in selected instruments with zero or limited market exposure. In statistical terms, absolute return strategies should have very low correlation with the market return. Typically, hedge funds tend to employ absolute return strategies. Below, a few examples show how news analysis can be applied in the absolute return strategy space with the purpose to identify alpha opportunities applying a market neutral strategy or based on volatility trading

Example 1

Scenario: The gap between the news sentiment scores for direction, S, of Company X and Market Y has moved beyond + 20. That is, SX − SY ≥ 20.

Action: Buy the stock on Company X and short the future on Market Y.

Exit Strategy: When the gap in the news sentiment scores for direction of Company X and Market Y has disappeared, SX − SY = 0, sell the stock on Company X and go long the future on Market Y to close the positions.

Example 2

Scenario: The news sentiment score for volatility of Company X goes above 70 out of 100 indicating an expected volatility above the option implied volatility.

Action: Buy a short-dated straddle (the purchase of both a put and a call) on the stock of Company X.

Exit Strategy: Keep the straddle on Company X until expiry or until a certain profit target has been reached

Relative Return Strategies
The objective of relative return strategies is to either replicate (passive management) or outperform (active management) a theoretical passive reference portfolio or benchmark. To meet these objectives such strategies typically involve long positions in selected instruments. In statistical terms, relative return strategies often have high correlation with the market return. Typically, mutual funds tend to employ relative return strategies. Below, a few examples show how news analysis can be applied in the relative return strategy space with the purpose to outperform the market applying a stock picking strategy and by making tactical tilts to ones asset allocation model.

Example 1

Scenario: The news sentiment score for direction of Company X goes above 70 out of 100.

Action: Buy the stock on Company X.

Exit Strategy: When the news sentiment score for direction of Company X falls below 60, sell the stock on Company X to close the position.

Example 2

Scenario: The news sentiment score for direction of Sector Z goes above 70 out of 100.

Action: Include Sector Z as a tactical bet in the asset allocation model.

Exit Strategy: When the news sentiment score for direction of Sector Z falls below 60, remove the tactical bet for Sector Z from the asset allocation model.
(en.wikipedia.org)

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Newspapers

Most large cities in the United States historically had morning and afternoon newspapers. As the media evolved and news outlets increased to the point of near over-saturation, afternoon newspapers were shut down except for relatively few. Morning newspapers have been gradually losing circulation, according to reports advanced by the papers themselves.

Commonly, news content should contain the "Five Ws" (who, what, when, where, why, and also how) of an event. There should be no questions remaining. Newspapers normally write hard news stories, such as those pertaining to murders, fires, wars, etc. in inverted pyramid style so the most important information is at the beginning. Busy readers can read as little or as much as they desire. Local stations and networks with a set format must take news stories and break them down into the most important aspects due to time constraints.

Cable news channels such as BBC News, Fox News, MSNBC, and CNN, are able to take advantage of a story, sacrificing other, decidedly less important stories, and giving as much detail about breaking news as possible.

News organizations are often expected to aim for objectivity; reporters claim to try to cover all sides of an issue without bias, as compared to commentators or analysts, who provide opinion or personal point-of-view. However, several governments impose certain constraints or police news organizations for bias. In the United Kingdom, for example, limits are set by the government agency Ofcom, the Office of Communications. Both newspapers and broadcast news programs in the United States are generally expected to remain neutral and avoid bias except for clearly indicated editorial articles or segments. Many single-party governments have operated state-run news organizations, which may present the government's views.

Even in those situations where objectivity is expected, it is difficult to achieve, and individual journalists may fall foul of their own personal bias, or succumb to commercial or political pressure. Similarly, the objectivity of news organizations owned by conglomerated corporations fairly may be questioned, in light of the natural incentive for such groups to report news in a manner intended to advance the conglomerate's financial interests. Individuals and organizations who are the subject of news reports may use news management techniques to try to make a favourable impression.[citation needed] Because each individual has a particular point of view, it is recognized that there can be no absolute objectivity in news reporting.

Newsworthiness
Newsworthiness is defined as a subject having sufficient relevance to the public or a special audience to warrant press attention or coverage.

In some countries and at some points in history, what news media and the public has considered "newsworthy" has met different definitions. For example, mid-twentieth-century news reporting in the United States focused on political and local issues with important socio-economic impacts, such as the landing of a living person on the moon or the cold war. More recently, the focus similarly remains on political and local issues; however, the news media now comes under criticism for over-emphasis on "non-news" and "gossip" such as celebrities' personal social issues, local issues of little merit, as well as biased sensationalism of political topics such as terrorism and the economy. Thus newsworthiness does not only depend on the topic, but also the presentation of the topic and the selection of information from that topic.
(en.wikipedia.org)

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News

News is the communication of selected information on current events which is presented by print, broadcast, Internet, or word of mouth to a third party or mass audience.

Etymology
One theory is that news developed as a special use of the plural form of new in the 14th century. In Middle English, the equivalent word was newes, like the French nouvelles and the German neues. Somewhat similar developments are found in some of the Slavic languages (Czech and Slovak), where there exists a word noviny ("news"), developed from the word nový ("new"), and in the Celtic languages Welsh and Cornish, where there are the words newyddion and nowodhow, respectively from W. newydd and C. nowydh.

A folk etymology suggests that it is an acronym of the cardinal directions: north, east, west, and south.

History of News
Before the invention of newspapers in the early 17th century, official government bulletins and edicts were circulated at times in some centralized empires.

The first documented use of an organized courier service for the diffusion of written documents is in Egypt, where Pharaohs used couriers for the diffusion of their decrees in the territory of the State (2400 BC). This practice almost certainly has roots in the much older practice of oral messaging and may have been built on a pre-existing infrastructure.

In Ancient Rome, Acta Diurna, or government announcement bulletins, were made public by Julius Caesar. They were carved in metal or stone and posted in public places.

In China, early government-produced news sheets, called tipao, circulated among court officials during the late Han dynasty (second and third centuries AD). Between 713 and 734, the Kaiyuan Za Bao ("Bulletin of the Court") of the Chinese Tang Dynasty published government news; it was handwritten on silk and read by government officials. In 1582 there was the first reference to privately published newssheets in Beijing, during the late Ming Dynasty;

In Early modern Europe, increased cross-border interaction created a rising need for information which was met by concise handwritten newssheets. In 1556, the government of Venice first published the monthly Notizie scritte, which cost one gazetta. These avvisi were handwritten newsletters and used to convey political, military, and economic news quickly and efficiently to Italian cities (1500–1700) — sharing some characteristics of newspapers though usually not considered true newspapers. Due to low literacy rates, news was at times disseminated by town criers.

Relation aller Fürnemmen und gedenckwürdigen Historien, from 1605, is recognized as the world's first newspaper.

The oldest news agency is the Agence France-Presse (AFP). It was founded in 1835 by a Parisian translator and advertising agent, Charles-Louis Havas as Agence Havas.

In modern times, printed news had to be phoned in to a newsroom or brought there by a reporter, where it was typed and either transmitted over wire services or edited and manually set in type along with other news stories for a specific edition. Today, the term "breaking news" has become trite as broadcast and cable news services use live satellite technology to bring current events into consumers' homes live as they happen. Events that used to take hours or days to become common knowledge in towns or in nations are fed instantaneously to consumers via radio, television, mobile phone, and the Internet.
(en.wikipedia.org)

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