Textual analysis is a tool to describe the tone
of a document such as a newspaper article,
annual report or IPO prospectus.
In doing so, it
uses some selected words as indicators of a
specific tone. It therefore requires a dictionary
that assigns words into sentiment categories
such as positive, negative, optimist and
pessimist, or certain and uncertain etc. Using
the dictionary, the total number of a particular
group of words in a document is calculated.
This total is usually normalised with the total
number of words in the document or is netted
with the number of words with the opposite
tone to create a final tone indicator.
For example, an article which includes an
overwhelming number of words such as
“happy”, “cheerful” or “joyful” etc. Has a positive
tone or sentiment. On the other hand, an
article which includes many words like
“unhappy”, “sad” or “depressed” has a negative
tone or sentiment.