Research On The Impact Of Investor Sentiment On Stock Price Volatility

In the traditional financial theory,according to the assumption of rational behavior of market investors,investors will pursue higher interests under the condition of relatively stable risks,and pursue risk minimization under the condition of the same interests.At the same time,unscientific asset pricing will be used by investors to carry out arbitrage and other market activities,and finally realize the rationality of its price.However,with the development and continuous evolution of the financial market,more and more financial related issues cannot be logically explained and elaborated through the previous financial theories.Therefore,scholars have conducted more in-depth research,improvement and optimization on the relevant financial statements of investors’ rationality,combined the subjective thinking activities and emotional fluctuations of investors into the existing theories,and constructed the current behavioral finance.From the perspective of individual investors,this theory analyzes and explains the difficulties existing in the original theory through such factors as investors’ thoughts and behaviors.Through the research,it is found that the constant fluctuation of the stock market price is largely due to the irrational decision-making caused by the subjective thoughts and emotions of investors.Especially today,when the Internet is widely spread,the financial information disclosed on the Internet can cause the most direct,rapid and timely response to investors’ thoughts and emotions.Therefore,in the context of the Internet information age,it is of great significance to explore the impact of investor sentiment on stock price volatility.Based on the background of the Internet information age.this paper focuses on the impact of investor sentiment on stock price volatility.Research shows that when the investor’s mood rises positively,the stock price will rise accordingly;On the contrary,when investors are pessimistic,the stock price will also decrease.The impact is continuous,and the stock price fluctuation will react on the investor sentiment,forming a secondary impact between the two,and the impact between the two will slowly reduce due to the extension of time.In the empirical analysis part of this paper,the first part is to integrate the coefficients associated with the model,and then use the principal component analysis method and linear regression method to form the overall coefficient of investor sentiment,and then use the variance volatility as the basic indicator to measure stock price volatility,which is used as the indicator condition for the next discussion;The second part is to use the Garch model to investigate the relationship between investor sentiment and stock price volatility,so as to find out the impact of investor sentiment on stock price volatility.