An Empirical Analysis on the Connection between Investor Sentiment and the Composite Index of Shanghai Stock Exchange

Investor sentiment is a market index which reflects investors' will or market trends in the future. The paper selects data from CCTV security column investigation about investor sentiment and analyzes the relation between investor sentiment index and the composite index of the Shanghai Stock Exchange. The results suggest that there are very close relations and relatively consistent trend and strong correlation between investor sentiment and activity. Investor sentiment index provides means of investor's psychology and behavioral modes analysis. Regulations department can control the rhythm of market movement by adjusting and regulating investor sentiment.