2.

Seasonal Component: The second step is to estimate the

seasonal component of the time series, which represents the
periodic patterns or cycles in the data that repeat over fixed
time intervals. This can be done using various methods, such
as seasonal indices, Fourier analysis, or seasonal regression
models. The seasonal component captures the systematic
variation in the time series due to seasonal effects, such as

pp
weather, holidays, or economic cycles.
3. Residual Component: The third step is to estimate the
residual component of the time series, which represents the

A
random or unpredictable variation in the data that is not
explained by the trend or seasonal components. This can be

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done by subtracting the estimated trend and seasonal
components from the original time series. The residual
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component captures the unexplained variation in the time
series and is usually the least important component for
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forecasting.
● Once the time series has been decomposed into its components,
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each component can be analyzed separately to better understand

its characteristics and behavior.
For example, the trend component can be used to identify
in

●
long-term patterns and changes in the data, while the seasonal
component can be used to identify seasonal effects and patterns.
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● The residual component can be used to identify outliers and

random fluctuations in the data.
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● The decomposition of a time series can also be used for forecasting

by extrapolating the trend and seasonal components into the future
and adding them together to obtain a forecast.
● The residual component can be used to estimate the uncertainty or
variability in the forecast

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Q5. Write a short note on the ARIMA Model. (P4 - Appeared 1 Time)
(5-10 Marks)
Ans: ARIMA (Autoregressive Integrated Moving Average) model is a popular
statistical method used for time series analysis and forecasting.
● It is a combination of three methods: autoregression, differencing,
and moving average.

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● The ARIMA model is a generalisation of the simpler ARMA
(Autoregressive Moving Average) model, which assumes that the
time series is stationary (i.e., the statistical properties of the series

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do not change over time).
● However, many time series in real-world applications are
non-stationary, meaning that the statistical properties change over

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time.
●
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ARIMA models can handle non-stationary time series by
incorporating differencing, which removes the trend or seasonality
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component from the series. The ARIMA model also includes
autoregression and moving average components, which capture
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the autocorrelation and noise components of the series,

respectively.
● ARIMA models are specified by three parameters:
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p, d, and q.
● The parameter p represents the autoregression order, which is the
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number of lagged values of the dependent variable used to predict

the current value.
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● The parameter q represents the moving average order, which is the

number of lagged errors used to predict the current value.
● The parameter d represents the differencing order, which is the
number of times the series is differenced to make it stationary.

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 ● ARIMA models can be used for both time series analysis and
forecasting.
● For time series analysis, ARIMA models can be used to identify the
underlying patterns and trends in the data, and to test for the
presence of seasonality or other cyclical components.
● For forecasting, ARIMA models can be used to predict future values
of the time series based on its past behaviour.

pp
● Here's a flowchart for building an ARIMA model:
1. Examine the time series data to determine if it is stationary. If
it is not stationary, apply differencing to make it stationary.

A
2. Determine the order of differencing (d) required to make the
series stationary. This can be done by examining the

s
autocorrelation function (ACF) and partial autocorrelation
function (PACF) plots of the differenced series.
3.
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Determine the order of the autoregressive (p) and moving
average (q) terms required for the model. This can also be
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done by examining the ACF and PACF plots of the
differenced series.
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4. Fit the ARIMA model to the time series data using the chosen
values of p, d, and q. This can be done using a variety of
statistical software packages.
in

5. Check the residuals of the ARIMA model for autocorrelation,

non-normality, and heteroscedasticity. If any of these issues
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are present, re-estimate the model or consider using a

different model.
B

6. Use the ARIMA model to make predictions for future time

periods.
7. Check the accuracy of the ARIMA model predictions using
metrics such as mean absolute error (MAE) or root mean
squared error (RMSE).

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 8. Refine the ARIMA model as necessary based on the
prediction accuracy and additional insights gained from the
analysis of the time series data.

Q6. Describe in detail Customer Segmentation. (P4 - Appeared 1 Time)

(5-10 Marks)

pp
Ans: Customer segmentation is a technique used by businesses to divide
their customers into groups based on common characteristics such as
demographics, behaviour, and purchasing habits. The goal of customer

A
segmentation is to better understand the needs and preferences of
different customer groups and tailor marketing strategies to each group
accordingly.

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Here are the steps involved in customer segmentation:
1.
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Data collection: The first step is to gather data on customers,
including information such as age, gender, income, and purchase
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history.
2. Data preprocessing: Once the data has been collected, it needs to
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be cleaned and processed. This involves removing duplicates, filling

in missing values, and converting categorical variables into
numerical values.
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3. Feature selection: The next step is to select the relevant features

that will be used to group the customers. This can be done using
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various techniques such as correlation analysis, principal

component analysis, or domain expertise.
B

4. Similarity or distance measure: The similarity or distance measure is

a key component of customer segmentation, which is used to
determine how similar or dissimilar two customers are. Common
measures include Euclidean distance, cosine similarity, and
Manhattan distance.

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 5. Clustering algorithm: There are several clustering algorithms that
can be used for customer segmentation, including K-means,
hierarchical clustering, and density-based clustering. The choice of
algorithm depends on the specific problem and the characteristics
of the data.
6. Evaluation: After clustering, it is important to evaluate the quality of
the clustering results. This can be done using various metrics such

pp
as silhouette score, Dunn index, or Calinski-Harabasz index.
7. Marketing strategy: Once the customers have been segmented into
groups, businesses can tailor their marketing strategies to each

A
group. For example, a company may create different advertising
campaigns for high-income customers versus low-income

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customers.
Customer segmentation has many practical applications, including
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improving customer retention, increasing customer lifetime value, and
optimising marketing spend. It is widely used in industries such as retail,
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e-commerce, and healthcare to gain insights from large datasets and
make better decisions.
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Q7. Explain Time series analysis using linear regression. (P4 - Appeared
in

1 Time) (5-10 Marks)

Ans: Time series analysis is a statistical method used to analyze data that
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is collected over a period of time.

● In time series analysis, the data is often plotted over time to identify
B

patterns, trends, and other useful information.

● Linear regression is a statistical method that can be used to analyze
time series data. Linear regression is a technique used to model the
relationship between a dependent variable and one or more
independent variables.

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 ● In time series analysis, the dependent variable is usually the
variable of interest that changes over time, and the independent
variables are time-related variables such as time itself or other
factors that may affect the dependent variable.
● The basic idea behind linear regression in time series analysis is to
use a linear equation to model the relationship between the
dependent variable and the independent variables.

pp
● The linear equation takes the form of:
Y = a + bX + e
where Y is the dependent variable, X is the independent variable, a

A
is the intercept, b is the slope, and e is the error term.
● The slope and intercept can be estimated using least-squares

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regression, which minimizes the sum of the squared differences
between the predicted values and the actual values.
●
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Once the slope and intercept are estimated, they can be used to
make predictions about future values of the dependent variable
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based on the independent variables.
● This is useful in time series analysis because it allows us to identify
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trends and patterns in the data and make predictions about future
behavior.
Linear regression can also be used to test hypotheses about the
in

●
relationship between the dependent variable and the independent
variables.
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● For example, we may want to test whether a particular independent

variable has a significant effect on the dependent variable, or
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whether there is a trend in the data over time.

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Q8. Difference between data science and data analytics. (P4 -
Appeared 1 Time) (5-10 Marks)
Ans:

Data Science Data Analytics

Parameter

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A field that encompasses A subset of data science that
a wide range of focuses on using statistical
Definition techniques, tools, and and computational methods

A
methodologies for working to explore, analyze, and
with data extract insights from data

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Extraction of insights and
Uncovering patterns, trends,
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knowledge from complex
and relationships in data and
Focus and large data sets using
using that information to
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advanced statistical and
make data-driven decisions
computational methods
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Data preparation, data

Exploratory data analysis,
Stages of modeling, data
statistical analysis, and
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Analysis visualization, and

predictive modeling
communication of insights
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Mainly used in business

Used in various fields,
settings to optimize
Application including business,
B

processes, improve customer

s healthcare, finance, and
experience, and increase
more
profitability

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 Machine learning, deep Statistical analysis,
Techniques learning, natural language regression analysis,
Used processing, computer clustering, data visualization,
vision, and more and more

In- depth knowledge of Basic Programming skills

Programm
programming is required are necessary for data

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ing Skills
for data science. analytics.

A
Data Science makes use
Use of
of machine learning Data Analytics doesn’t make
Machine
algorithms to get use of machine learning.

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Learning
insights. er
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Q9. more questions are available in Brainheaters app….
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.
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 pp
Full module-wise notes with

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29+ Q/A is available in

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Brainheaters App er
at
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Download the App Now!

in
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B

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 pp
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B

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