In September 2023, we introduced the Negativity Percentage, a metric derived from our proprietary Natural Language Processing applied to 8-K filings, aiming to provide insights into stock performance. Our initial findings suggested a correlation: companies with higher negativity ratios in their language tended to underperform in the market. Additionally, categorizing these companies into tertiles based on their negativity ratio, revealed tertile 1 consistently outperformed tertiles 2 and 3. For background knowledge on the original research, visit our blog.
Continuing our research, we have analyzed year-to-date data using the same methodology. The results reaffirm our initial findings.
Once again, we observe consistent behavior across companies in different tertiles of negativity ratio, with tertile 1 showcasing superior performance and tertile 3 underperforming. These consistent results reinforce the potential predictive power of the Negativity Percentage. It suggests that a high negativity ratio in 8-k filings could serve as an early indicator of poor stock performance. By incorporating this metric into their analysis, investors may make more informed decisions and potentially mitigate risks.
For those interested in delving deeper into our research, we invite you to visit our website at www.contextanalytics-ai.com. Feel free to reach out to us directly at contactus@contextanalytics-ai.com or click the button below for inquiries.