The Quantitative Representation of Market Sentiment and the Nonlinear Correlation Mechanism between Stock Price Fluctuations

DOI: https://doi.org/10.62517/jbm.202509526

Author(s)

Bohan Jia

Affiliation(s)

Jining Yucai High School, Jining, Shandong, China

Abstract

Market sentiment, as the core irrational factor influencing stock price fluctuations, breaks through the traditional linear paradigm in its correlation mechanism with stock prices and presents complex nonlinear characteristics. This paper reveals the threshold effect of emotion accumulation, the asymmetry between optimism and pessimism, and the dynamic transformation rules under market cycles by constructing a multi-dimensional emotion quantification system. Research has found that the relationship between sentiment indicators and stock price fluctuations is not a simple positive correlation, but rather forms a nonlinear transmission mechanism through paths such as investor behavior distortion and information feedback distortion. This mechanism profoundly influences the operational efficiency of the market and provides a theoretical framework for understanding the accumulation and release of systemic financial risks.

Keywords

Market Sentiment; Quantitative Representation; Stock Price Fluctuations; Nonlinear Mechanism; Behavioral Finance

References

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