Does Twitter mood predict the stock market?

According to Johan Bollen, a professor of informatics at Indiana University, it does.

City AM's Craig Drake reports how Bollen's research paper, titled "Twitter mood predicts stock market" claims an 87 per cent accuracy rate at predicting the movements of the Dow.

That's why Derwent Capital Markets have bought the exclusive rights for the use of Bollen's analytics program via a licensing agreement with Indiana University. The hedge fund has also hired Professor Bollen, along with co-author of the study Huina Mao, as consultants.

Last week, they launched the world's first social-media-based hedge fund, claiming expectations of a yield 15 to 20 per cent returns.