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Business Statistics and Analytics (Solution 1)

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Raghav Bansal
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22 views3 pages

Business Statistics and Analytics (Solution 1)

Uploaded by

Raghav Bansal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Part A (Short Answer )

Qus 1. Demonstrate the meaning of Time Series Analysis

Answer - Time Series Analysis is a statistical technique used to analyze and interpret time-
ordered data points. It involves studying the patterns and trends within a dataset to make
predictions or identify underlying structures.

Qus 2 Explain the term Kurtosis ?

Answer- Kurtosis is a statistical measure that describes the distribution of data points in a
dataset, specifically focusing on the shape of the distribution's tails. It provides information
about the peakedness or flatness of a distribution compared to a normal distribution.

Qus 3 Rephrase the meaning of Partial Correlation

Answer - Partial correlation is a statistical concept that involves measuring the strength and
direction of the relationship between two variables while controlling for the influence of one
or more additional variables. In essence, it assesses the unique association between two
variables by removing the effects of other relevant variables, allowing for a more focused
examination of their specific correlation.

Qus 4 Identify the applicability of Type I and Type II error.

Answer - Type I and Type II errors are concepts commonly associated with hypothesis
testing in statistics. Here's a brief explanation of their applicability:

1. Type I Error (False Positive):


 Definition: Incorrectly rejecting a true null hypothesis.
 Applicability:
 Medical Testing: Concluding that a person has a disease when they are
actually healthy.
 Criminal Justice: Wrongly convicting an innocent person (assuming guilt
when they are innocent).
2. Type II Error (False Negative):
 Definition: Failing to reject a false null hypothesis.
 Applicability:
 Medical Testing: Failing to diagnose a disease when the person is actually
sick.
 Criminal Justice: Acquitting a guilty person (assuming innocence when they
are guilty).

Qus 5 - How will you solve the probable error of coefficient correlation?

1. Answer

 Calculate Fisher's z Transformation:
 Fisher's z transformation is calculated using the formula:
�=12ln⁡(1+�1−�)z=21ln(1−r1+r) where �r is the sample correlation
coefficient.
 Calculate Standard Error of z:
 The standard error of the z-score is then calculated using the formula:
���=1�−3SEz=n−31 where �n is the sample size.
 Calculate Probable Error of Standard Deviation:
 The probable error of the standard deviation of the correlation coefficient
(�.�.P.E.) is calculated using the formula: �.�.=1�−3P.E.=n−31

Part B( Long Answer )

Qus 1 Establish the relationship between correlation and regression coefficients.

Answer - 1Correlation Coefficient (r):

The correlation coefficient, denoted as r, measures the strength and direction of the linear
relationship between two variables. It ranges from -1 to 1, where:
 r=1r=1 indicates a perfect positive linear relationship.
 r=−1r=−1 indicates a perfect negative linear relationship.
 r=0r=0 indicates no linear relationship.
2 Simple Linear Regression Coefficients:

In simple linear regression, you have two variables: the independent variable ( X) and the
dependent variable ( Y). The regression equation is of the form Y=a+bX+ϵ, where:

 a is the intercept,
 b is the slope (regression coefficient),
 ϵ is the error term.
3 Relationship:

The slope of the regression line ( b) is related to the correlation coefficient ( r) by the formula:

b=r×sXsY

where:

sY is the standard deviation of the dependent variable (�Y),

sX is the standard deviation of the independent variable (�X).

4 Interpretation:

The sign of the correlation coefficient and the regression coefficient indicates the direction of
the relationship:
If r > 0, the slope (b) is positive, indicating a positive relationship.
If r < 0, the slope (b) is negative, indicating a negative relationship.

5 Strength of Relationship:

The magnitude of the correlation coefficient (∣∣∣r∣) reflects the strength of the linear
relationship, while the slope ( b) in regression indicates the rate of change in the dependent
variable for a one-unit change in the independent variable.

Part C

Qus 5 Establish the relationship between correlation and regression coefficients.

Answer –
Basis Correlation Regression

A statistical measure that defines Describes how an independent


Meaning co-relationship or association of variable is associated with the
two variables. dependent variable.

Dependent and Independent


No difference Both variables are different.
variables

To fit the best line and estimate


To describe a linear relationship
Usage one variable based on another
between two variables.
variable.

To estimate values of a random


To find a value expressing the
Objective variable based on the values of a
relationship between variables.
fixed variable

There are some differences between Correlation and regression.

 Correlation shows the quantity of the degree to which two variables are associated. It does not fix a line
through the data points. You compute a correlation that shows how much one variable changes when the
other remains constant. When r is 0.0, the relationship does not exist. When r is positive, one variable goes
high as the other goes up. When r is negative, one variable goes high as the other goes down.

 Linear regression finds the best line that predicts y from x, but Correlation does not fit a line.

 Correlation is used when you measure both variables, while linear regression is mostly applied when x is a
variable that is manipulated.

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