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Our sentiment analysis of the latest Insurance industry headlines has revealed an interesting contrarian idea.
China Life Insurance Co. Ltd. (LFC) has seen overwhelmingly negative news coverage, and now we’re wondering: is this a contrarian signal? Is everyone too pessimistic on the outlook for the company?
Herd Behavior: The Significance of Extreme Investor Sentiment
It is quite common to see irrational herd behavior among investors, especially if they all move together in stock trading.
Just think about it: if everyone is optimistic and buying, who else is left to keep buying the stock and push it higher?
Or alternatively, if everyone is pessimistic and selling a certain stock, there will come a point when the number of potential buyers far exceed potential sellers.
Contextuall is built on this idea. We try to identify cases of extremely one-sided media sentiment, and offer tools to our users to profit from investor herd behavior.
Sentiment Stats: China Life Insurance Co. Ltd. (LFC) Compared to the Insurance Industry
Contextuall’s news sentiment algorithm analyzed recent China Life Insurance Co. Ltd. (LFC) headlines, classifying 20.0% of headlines as Positive, vs. the Insurance industry average of 28.93%.
36.92% of headlines have been classified as Negative, vs. an industry average of 12.34%.
Given the extreme bearishness in the media about the stock, should you be looking to buy the stock? With everyone pushing bad news on the company, how much downside is left to price in?
Thoughts? Let us know in the comment section to the right.
Links: Charting News Sentiment Trends
The following embedded chart can be used to explore sentiment trends for other major companies, where each dot represents a clickable link to a company page.
Positive sentiment percentages are plotted on the vertical axis, while negative sentiment percentages are plotted on the horizontal axis.
In other words, companies in the top left have more optimistic sentiment than companies in the bottom right.
Click on any of the dots to access more news.
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