Dynamic Hedging Strategies in Derivatives Markets with LLM-Driven Sentiment and News Analytics

Dynamic hedging strategies are essential for effective risk management in derivatives markets, where volatility and market sentiment can greatly impact performance. This paper introduces a novel framework that leverages large language models (LLMs) for sentiment analysis and news analytics to inform hedging decisions. By analyzing textual data from diverse sources like news articles, social media, and financial reports, our approach captures critical sentiment indicators that reflect current market conditions. The framework allows for real-time adjustments to hedging strategies, adapting positions based on continuous sentiment signals. Backtesting results on historical derivatives data reveal that our dynamic hedging strategies achieve superior risk-adjusted returns compared to conventional static approaches. The incorporation of LLM-driven sentiment analysis into hedging practices presents a significant advancement in decision-making processes within derivatives trading. This research showcases how sentiment-informed dynamic hedging can enhance portfolio management and effectively mitigate associated risks.

Evaluate Bias without Manual Test Sets: A Concept Representation Perspective for LLMs

Bias in Large Language Models (LLMs) significantly undermines their reliability and fairness. We focus on a common form of bias: when two reference concepts in the model's concept space, such as sentiment polarities (e.g., "positive" and "negative"), are asymmetrically correlated with a third, target concept, such as a reviewing aspect, the model exhibits unintended bias. For instance, the understanding of "food" should not skew toward any particular sentiment. Existing bias evaluation methods assess behavioral differences of LLMs by constructing labeled data for different social groups and measuring model responses across them, a process that requires substantial human effort and captures only a limited set of social concepts. To overcome these limitations, we propose BiasLens, a test-set-free bias analysis framework based on the structure of the model's vector space. BiasLens combines Concept Activation Vectors (CAVs) with Sparse Autoencoders (SAEs) to extract interpretable concept representations, and quantifies bias by measuring the variation in representational similarity between the target concept and each of the reference concepts. Even without labeled data, BiasLens shows strong agreement with traditional bias evaluation metrics (Spearman correlation r > 0.85). Moreover, BiasLens reveals forms of bias that are difficult to detect using existing methods. For example, in simulated clinical scenarios, a patient's insurance status can cause the LLM to produce biased diagnostic assessments. Overall, BiasLens offers a scalable, interpretable, and efficient paradigm for bias discovery, paving the way for improving fairness and transparency in LLMs.

Integrating Emotion Distribution Networks and Textual Message Analysis for X User Emotional State Classification

As the popularity and reach of social networks continue to surge, a vast reservoir of opinions and sentiments across various subjects inundates these platforms. Among these, X social network (formerly Twitter) stands as a juggernaut, boasting approximately 420 million active users. Extracting users' emotional and mental states from their expressed opinions on social media has become a common pursuit. While past methodologies predominantly focused on the textual content of messages to analyze user sentiment, the interactive nature of these platforms suggests a deeper complexity. This study employs hybrid methodologies, integrating textual analysis, profile examination, follower analysis, and emotion dissemination patterns. Initially, user interactions are leveraged to refine emotion classification within messages, encompassing exchanges where users respond to each other. Introducing the concept of a communication tree, a model is extracted to map these interactions. Subsequently, users' bios and interests from this tree are juxtaposed with message text to enrich analysis. Finally, influential figures are identified among users' followers in the communication tree, categorized into different topics to gauge interests. The study highlights that traditional sentiment analysis methodologies, focusing solely on textual content, are inadequate in discerning sentiment towards significant events, notably the presidential election. Comparative analysis with conventional methods reveals a substantial improvement in accuracy with the incorporation of emotion distribution patterns and user profiles. The proposed approach yields a 12% increase in accuracy with emotion distribution patterns and a 15% increase when considering user profiles, underscoring its efficacy in capturing nuanced sentiment dynamics.

Language Modeling for the Future of Finance: A Quantitative Survey into Metrics, Tasks, and Data Opportunities

Recent advances in language modeling have led to growing interest in applying Natural Language Processing (NLP) techniques to financial problems, enabling new approaches to analysis and decision-making. To systematically examine this trend, we review 374 NLP research papers published between 2017 and 2024 across 38 conferences and workshops, with a focused analysis of 221 papers that directly address finance-related tasks. We evaluate these papers across 11 qualitative and quantitative dimensions, identifying key trends such as the increasing use of general-purpose language models, steady progress in sentiment analysis and information extraction, and emerging efforts around explainability and privacy-preserving methods. We also discuss the use of evaluation metrics, highlighting the importance of domain-specific ones to complement standard machine learning metrics. Our findings emphasize the need for more accessible, adaptive datasets and highlight the significance of incorporating financial crisis periods to strengthen model robustness under real-world conditions. This survey provides a structured overview of NLP research applied to finance and offers practical insights for researchers and practitioners working at this intersection.

BAR-Analytics: A Web-based Platform for Analyzing Information Spreading Barriers in News: Comparative Analysis Across Multiple Barriers and Events

This paper presents BAR-Analytics, a web-based, open-source platform designed to analyze news dissemination across geographical, economic, political, and cultural boundaries. Using the Russian-Ukrainian and Israeli-Palestinian conflicts as case studies, the platform integrates four analytical methods: propagation analysis, trend analysis, sentiment analysis, and temporal topic modeling. Over 350,000 articles were collected and analyzed, with a focus on economic disparities and geographical influences using metadata enrichment. We evaluate the case studies using coherence, sentiment polarity, topic frequency, and trend shifts as key metrics. Our results show distinct patterns in news coverage: the Israeli-Palestinian conflict tends to have more negative sentiment with a focus on human rights, while the Russia-Ukraine conflict is more positive, emphasizing election interference. These findings highlight the influence of political, economic, and regional factors in shaping media narratives across different conflicts.

IberBench: LLM Evaluation on Iberian Languages

Large Language Models (LLMs) remain difficult to evaluate comprehensively, particularly for languages other than English, where high-quality data is often limited. Existing benchmarks and leaderboards are predominantly English-centric, with only a few addressing other languages. These benchmarks fall short in several key areas: they overlook the diversity of language varieties, prioritize fundamental Natural Language Processing (NLP) capabilities over tasks of industrial relevance, and are static. With these aspects in mind, we present IberBench, a comprehensive and extensible benchmark designed to assess LLM performance on both fundamental and industry-relevant NLP tasks, in languages spoken across the Iberian Peninsula and Ibero-America. IberBench integrates 101 datasets from evaluation campaigns and recent benchmarks, covering 22 task categories such as sentiment and emotion analysis, toxicity detection, and summarization. The benchmark addresses key limitations in current evaluation practices, such as the lack of linguistic diversity and static evaluation setups by enabling continual updates and community-driven model and dataset submissions moderated by a committee of experts. We evaluate 23 LLMs ranging from 100 million to 14 billion parameters and provide empirical insights into their strengths and limitations. Our findings indicate that (i) LLMs perform worse on industry-relevant tasks than in fundamental ones, (ii) performance is on average lower for Galician and Basque, (iii) some tasks show results close to random, and (iv) in other tasks LLMs perform above random but below shared task systems. IberBench offers open-source implementations for the entire evaluation pipeline, including dataset normalization and hosting, incremental evaluation of LLMs, and a publicly accessible leaderboard.

Linguistic Interpretability of Transformer-based Language Models: a systematic review

Language models based on the Transformer architecture achieve excellent results in many language-related tasks, such as text classification or sentiment analysis. However, despite the architecture of these models being well-defined, little is known about how their internal computations help them achieve their results. This renders these models, as of today, a type of 'black box' systems. There is, however, a line of research -- 'interpretability' -- aiming to learn how information is encoded inside these models. More specifically, there is work dedicated to studying whether Transformer-based models possess knowledge of linguistic phenomena similar to human speakers -- an area we call 'linguistic interpretability' of these models. In this survey we present a comprehensive analysis of 160 research works, spread across multiple languages and models -- including multilingual ones -- that attempt to discover linguistic information from the perspective of several traditional Linguistics disciplines: Syntax, Morphology, Lexico-Semantics and Discourse. Our survey fills a gap in the existing interpretability literature, which either not focus on linguistic knowledge in these models or present some limitations -- e.g. only studying English-based models. Our survey also focuses on Pre-trained Language Models not further specialized for a downstream task, with an emphasis on works that use interpretability techniques that explore models' internal representations.

Trusting CHATGPT: how minor tweaks in the prompts lead to major differences in sentiment classification

One fundamental question for the social sciences today is: how much can we trust highly complex predictive models like ChatGPT? This study tests the hypothesis that subtle changes in the structure of prompts do not produce significant variations in the classification results of sentiment polarity analysis generated by the Large Language Model GPT-4o mini. Using a dataset of 100.000 comments in Spanish on four Latin American presidents, the model classified the comments as positive, negative, or neutral on 10 occasions, varying the prompts slightly each time. The experimental methodology included exploratory and confirmatory analyses to identify significant discrepancies among classifications. The results reveal that even minor modifications to prompts such as lexical, syntactic, or modal changes, or even their lack of structure impact the classifications. In certain cases, the model produced inconsistent responses, such as mixing categories, providing unsolicited explanations, or using languages other than Spanish. Statistical analysis using Chi-square tests confirmed significant differences in most comparisons between prompts, except in one case where linguistic structures were highly similar. These findings challenge the robustness and trust of Large Language Models for classification tasks, highlighting their vulnerability to variations in instructions. Moreover, it was evident that the lack of structured grammar in prompts increases the frequency of hallucinations. The discussion underscores that trust in Large Language Models is based not only on technical performance but also on the social and institutional relationships underpinning their use.

Historical Ink: Exploring Large Language Models for Irony Detection in 19th-Century Spanish

This study explores the use of large language models (LLMs) to enhance datasets and improve irony detection in 19th-century Latin American newspapers. Two strategies were employed to evaluate the efficacy of BERT and GPT-4o models in capturing the subtle nuances nature of irony, through both multi-class and binary classification tasks. First, we implemented dataset enhancements focused on enriching emotional and contextual cues; however, these showed limited impact on historical language analysis. The second strategy, a semi-automated annotation process, effectively addressed class imbalance and augmented the dataset with high-quality annotations. Despite the challenges posed by the complexity of irony, this work contributes to the advancement of sentiment analysis through two key contributions: introducing a new historical Spanish dataset tagged for sentiment analysis and irony detection, and proposing a semi-automated annotation methodology where human expertise is crucial for refining LLMs results, enriched by incorporating historical and cultural contexts as core features.

Enhanced Sentiment Analysis of Iranian Restaurant Reviews Utilizing Sentiment Intensity Analyzer & Fuzzy Logic

This research presents an advanced sentiment analysis framework studied on Iranian restaurant reviews, combining fuzzy logic with conventional sentiment analysis techniques to assess both sentiment polarity and intensity. A dataset of 1266 reviews, alongside corresponding star ratings, was compiled and preprocessed for analysis. Initial sentiment analysis was conducted using the Sentiment Intensity Analyzer (VADER), a rule-based tool that assigns sentiment scores across positive, negative, and neutral categories. However, a noticeable bias toward neutrality often led to an inaccurate representation of sentiment intensity. To mitigate this issue, based on a fuzzy perspective, two refinement techniques were introduced, applying square-root and fourth-root transformations to amplify positive and negative sentiment scores while maintaining neutrality. This led to three distinct methodologies: Approach 1, utilizing unaltered VADER scores; Approach 2, modifying sentiment values using the square root; and Approach 3, applying the fourth root for further refinement. A Fuzzy Inference System incorporating comprehensive fuzzy rules was then developed to process these refined scores and generate a single, continuous sentiment value for each review based on each approach. Comparative analysis, including human supervision and alignment with customer star ratings, revealed that the refined approaches significantly improved sentiment analysis by reducing neutrality bias and better capturing sentiment intensity. Despite these advancements, minor over-amplification and persistent neutrality in domain-specific cases were identified, leading us to propose several future studies to tackle these occasional barriers. The study's methodology and outcomes offer valuable insights for businesses seeking a more precise understanding of consumer sentiment, enhancing sentiment analysis across various industries.