'Astounding' Trading Accuracy Using Twitter: Fund Manager

CNBC

Paul Hawtin

Can millions of random daily tweets predict movements in the Dow Jones Industrial Average?

A team of U.K. traders and Indiana University academics are putting their reputations—and 25 million pounds—on the line to bet that the answer is yes.

CNBC's Kate Kelly spoke exclusively with the key players behind this ambitious endeavor:

Twenty-eight year old Paul Hawtin, who recently opened Derwent Capital just outside London, plans to launch a hedge fund in early April that will capitalize on a curious indicator discovered by Indiana University informatics Professor Johan Bollen.

Last fall, Bollen published research suggesting that the collective mood of Twitter—as measured by millions of random daily tweets—could predict with 87 percent accuracy how the Dow would move on any given day, up to four days before it actually happened.

“If we can predict the market three or four days out, that’s going to be huge,“ Bollen told CNBC’s Kate Kelly.

“Everybody was telling me, ‘this is huge, you’re going to be rich,’ and of course I’m not rich,” he said . A moment later, he added, "well, who knows."

The results are nothing short of “astounding,” according to Hawtin. “From a financial point of view, it’s pretty momentous.”

CNBC Trading on Twitter - See Complete Coverage

Check out our entire conversation with Professor Johan Bollen and Paul Hawtin in this web exclusive to see how they’re planning to make millions off of your everyday tweets.

Watch Kate Kelly's "Trading on Twitter" reports on Tuesday, March 8, on Squawk Box, Squawk on the Street and Power Lunch and Wednesday, March 9, on Squawk Box, The Call, The Strategy Session and Fast Money.

CNBC Trading on Twitter - A CNBC Special Report