The Research Of Correlation Between Baidu Index And Stock Market Performance

With the development of Internet technology, the amount of informationin society increases rapidly, but people’s attention are limited. This leads tothe contradiction between finiteness of attention and richness of information.Scarcity of attention makes investors’ attention become the important factorwhich can affect the securities asset pricing. The current research forinvestors’ attention attract more and more attention from the scholars, and itwill play a more and more important role in investors’ decision-making andinvestment behavior. The limitation of the attention causes people only toacquire and analyze the information which they are interested in, and then theinformation is convert to investment decision, so that ultimately affect theasset pricing of the securities.This paper uses the baidu index as a proxy variable to measure investors’attention, and provide a empirical study on the correlation between theinvestors’ attention and stock market performance of18samples.First of all, we studied the correlation between the current investors’attention and the current stock market index. Then we classified the samplesof selected18stocks into the cyclical and non-cyclical stock, and studiedwhether there is a difference in the market in the correlation in the traditionalcyclical and non-cyclical stock. In addition, this paper introduced the absolute value of excess returns to measure the volatility of the stock, toprove whether the current or previous stocks baidu index will affect thecurrent stock volatility, similar to the liquidity index.