A new study has revealed ChatGPT can make stock market predictions just by scouring headlines

ChatGPT, OpenAI's artificial intelligence chatbot, has delivered stunning results in two market-oriented tests this month. It accurately assessed the sentiment of central bank statements from the Federal Reserve and evaluated stock movements based on news headlines - a key process for Wall Street quants when making trading decisions. The potential impact of these breakthroughs is immense, signalling that AI may soon become an integral part of financial markets worldwide.

In a paper,  titled “Can ChatGPT Decipher Fedspeak?”, Fed researchers Anne Lundgaard Hansen and Sophia Kazinnik pitted ChatGPT against popular model BERT and dictionary-based classification to decipher dovish versus hawkish central bank statements. 

Remarkably, ChatGPT outperformed its counterparts – providing explanations that closely resembled those of human analysts.

In the second study, “Can ChatGPT Forecast Stock Price Movements? Return Predictability and Large Language Models”,

University of Florida researchers tested ChatGPT's ability to interpret corporate news headlines not covered in the chatbot's training. 

Their findings revealed that the answers provided by ChatGPT had a statistical correlation with subsequent stock moves, indicating capability for correctly understanding implications within news stories.

New research suggests that ChatGPT can perform tasks without any prior training. This zero-shot capability has outperformed previous technologies, with even better results achieved when fine-tuned to specific examples.

- CyberBeat