A stock exchange is where you can purchase shares of a public company. There are so many Stock exchanges all over the world. The collection of stock exchanges is called the stock market. The stock market is a worldwide network, since when some changes occur in a stock exchange, it affects the stock market.
Stock exchanges do not run twenty-four into seven days. So that when stock exchanges in the USA such as the New York Stock Exchange and National Association of Securities Dealers open for the day, Tokyo Stock Exchange may near to close. This kind of regular event impacts the international stock market. Since that, it is important to analyze trends in the stock market geographically. And the stock market manipulates big data. This is where Google Trends comes into the scene.
There are different strategies proposed by people for using google trends to get insights into the stock market trends. But as we all know, stock market trends do not occur very scientifically all the time. There can be sudden changes in the direction of the value of different shares due to various reasons, such as the most recent example is the coronavirus.
The most simple way to use Google Trends to get an insightful idea about a particular asset’s value in a stock exchange and to compare it with other trending assets is not that complicated.
First, select some assets from your preferred stock exchange rough according to their stock value performance. For example, let’s take Apple, Google, Amazon, and Toyota stocks. Then go to the Google Trends website and check them on the same graph as below.
The keyword that you type here is very important. For example, you must select either Apple technology company or Apple stocks right away since in Google search the word Apple also includes the fruit too. The point is to narrow down the search to the particular stocks as much as we can. Then select the country accordingly if you go for a local stock exchange. Take a look at the time period, change it to “past hour” and also longer time periods and check the behaviour patterns of the assets with respect to the time. From the next drop-down menu, it’s better to select “finance”, since we are only interested in the financial aspect of the asset. By, it is set to web search, but you can also try “news search” as well. You will notice that Google trends even indicate the future trends for each search item if there is a trend available in dotted lines. This is also a good indication that helps you to understand whether people search more and more about the asset or the interest is going to decrease.
You will also see the compared interest breakdown per subregion.
You will also see the interest variations of subregion for each search item or asset.
As you see, Google Trends provides pretty helpful information when it comes to deciding which asset to buy shares from. Future trending line is a convenient feature since you can easily decide whether to buy (If it is at the beginning of the uptrend) or to sell (If you are at the beginning of the downtrend)
Also, it is important to note that if the asset is already up on the uptrend line not buy shares from that asset generally, since it is more prone to change the direction of the trend.
It is also essential not only to check the Google Trend graph of a particular asset, but also to check how the stock value changes in the stock exchange. There can be a time shift between the Google trends graph and the stock exchange graph, since people take time to check on Google and to buy shares in the stock exchange. Also, note that there is a chance to occur a peek in the graph of the Google Trends if people just search the asset because of news about it but without the intention to buy stocks.
Sometimes the Google trends graph and the stock exchange graph for a particular asset may not show a visible relationship or a pattern. In these situations, you will need to use regression methods to simplify the graph and to find the relationship between them.
Other than the above facts you can generally get an about how the stock market is going to behave by analysing the keywords such as “Trading”, “Top stocks”, “Stock price”, “Debt”, etc… These keywords provide insights into whether people are interested in investing in stocks at the time. Depending on that, stock prices can change. You can read further about how to use Google trends to find a relationship with stock prices from this link.
Stock predictions with Yahoo Finance
Also, note that “Yahoo Finance” is a great source to get information about the stock market and different assets. You can use it to check historical data and current data of the assets, compare them on the same graph.
Having said that, stock markets do not behave scientifically all the time, it is always better to get every possible insight from any source available. It is of course observed by many researchers that even though not all the time, there is a correlation scientifically.
This article was developed during collaboration with Manoj Rasika Koongahawatte, during Predictea Analytics Programme.