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TECHNOLOGY: New tool quantifies share price reaction to news

A new investor relations (IR) and marketing service has been launched to help companies rank the impact of media comment on its business performance and share price.

The Equity Priority and Optimiser service from Commetric ranks the impact of media comment on business performance, and determines the financial impact of each specific issue on share price, placing a financial value on good/bad communications.

Developed in partnership with CommEq Asset Management, the tool uses advanced natural language software and mathematical models to automatically map millions of news items against hundreds of thousands of stock price movements and billions of intra-day movements.

The system isolates the abnormal share price impact of more than 350 distinct business issues, and tracks more than 1,600 public companies across several exchanges.

Commetric innovations officer Christofer Solheim said: "Sometime a share price can rise even when a major PLC announces losses or falling earnings.

"On the face of it, you might expect ‘bad' news to impact negatively on share price, when in fact the losses might not have been as bad as the City expected.

"Conversely, ‘good' news such as a major new contract win can result in a share price fall. It might be that commentators adjudge the business to over-reaching itself financially, or it could just be that news of the win is contained in an article that generally talks about a downturn in the industry, and this again may cause a share price to fall.