What Is Sentiment Analysis?
Sentiment Analysis is an AI technique used to determine whether text expresses positive, negative, or neutral sentiment from sources such as financial news, analyst reports, forum discussions, and social media. In investing, sentiment analysis helps measure the "temperature" of market psychology — a factor that frequently drives short-term price movements.
Simple Explanation
Imagine walking through a market and overhearing conversations. If 8 out of 10 people are saying "steel prices are about to rise" — that is positive sentiment. If the majority is worried that "interest rates will climb and stocks will drop" — that is negative sentiment.
Sentiment Analysis does the same thing at massive scale: instead of you manually reading hundreds of articles and forum posts, AI reads everything and tells you which way the overall mood is leaning.
Real-World Example
Suppose you are following HPG (Hoa Phat) stock. Over the past week:
- News: 15 articles about HPG — 10 positive (rising steel exports, new orders), 3 neutral, 2 negative (rising raw material costs)
- Investment forums: 200 comments — 65% positive, 20% negative, 15% neutral
- Brokerage reports: 3 new reports — 2 recommend "buy," 1 recommends "hold"
Sentiment Analysis aggregates all these sources and produces a sentiment score: for example, +0.72/1.0 (strongly positive). This gives you a quick view of market mood around HPG without reading every individual article.
The system can also track changes in sentiment over time: if HPG's sentiment drops from +0.8 to +0.3 over 5 days while the price has not yet dropped — this could be an early warning signal.
Why It Matters for Investors
Sentiment drives short-term prices. Multiple studies show that social media and news sentiment correlate with price movements over the following 1-5 days. When sentiment reaches extremes (excessively positive or negative), it is typically a time for caution.
Information volume is overwhelming. The Vietnamese stock market generates thousands of articles daily across CafeF, VnEconomy, Fireant, and numerous Facebook groups. No one can read it all — but AI can.
Detecting divergence. When stock prices rise but sentiment is declining (or vice versa), that divergence is worth noting. For example: VCB's price keeps climbing but forum sentiment turns negative — this could signal profit-taking pressure ahead.
Sentiment Analysis should not be used in isolation but combined with fundamental and technical analysis for a comprehensive view.