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Regression Analysis

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Krishna Kumar
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78 views14 pages

Regression Analysis

Uploaded by

Krishna Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Regression Analysis

Concept of Regression Analysis


• Regression analysis is a set of statistical processes for estimating the relationships
between a dependent variable and one or more independent variables. It can be
utilized to assess the strength of the relationship between variables and for
modeling the future relationship between them.
• Regression analysis includes several variations, such as linear, multiple linear, and
nonlinear.
• The term was first used by British biometrician Sir Francis Galton in the later part
of the 19th century. In regression, we normally have one dependent variable and
one or more independent variables. Here we try to “regress” the value of the
dependent variable “Y” with the help of the independent variables. In other
words, we are trying to understand, how the value of ‘Y’ changes w.r.t change in
‘X’.
Linear Regression
• A linear regression model is used to depict a relationship between variables
that are proportional to each other. Meaning, that the dependent variable
increases/decreases with the independent variable.
• Linear Regression is a predictive model used for finding the linear
relationship between a dependent variable and one or more independent
variables. Here, ‘Y’ is our dependent variable, which is a continuous
numerical and we are trying to understand how ‘Y’ changes with ‘X’.
• The formula is typically represented as Y = aX + b, where Y represents the
dependent variable, a represents the slope of the regression equation, X
denotes the independent variable, and b represents a constant term
Application of Regression Analysis
• Regression analysis is used for prediction and forecasting. This has substantial
overlap with the field of machine learning. This statistical method is used across
different industries such as,
• Financial Industry- Understand the trend in the stock prices, forecast the prices,
and evaluate risks in the insurance domain
• Marketing- Understand the effectiveness of market campaigns, and forecast
pricing and sales of the product.
• Manufacturing- Evaluate the relationship of variables that determine to define a
better engine to provide better performance
• Medicine- Forecast the different combinations of medicines to prepare generic
medicines for diseases.
LINES OF REGRESSION
• Line of regression is the line which gives the best estimate of one variable for any
given value of the other variable. In case of two variables x and y, we shall have two
lines of regression; one of y on x and the other of x on y.
• Definition. Line of regression of y on x is the line which gives the best estimate for
the value of y for any specified value of x.

• Similarly, line of regression of x on y is the line which gives the best estimate for the
value of x for any specified value of y.
Formula and Procedure for calculating Linear
Regression when deviation is taken from actual mean.
• Steps:
• 1. Calculate Regression Equation : Table format

• 2. Find the deviation from actual mean :

• 3. Calculate fit a regression Equation on Y on X :


4. Calculate fit a regression Equation on X on Y :

5. Correlation Coefficient :
Sample Problem
Answer) X=900, Y=700, Dx-0 , Dy-0, dx2-6360,dy2-2868, DXDY-3900,
Byx-0.6132, Bxy-1.361, Y=0.6132+14.812, X=1.359y-5.27. r2=0.833, r= 0.9135
Answer) X=320, Y=380, Dx-0 , Dy-0, dx2-140,dy2-398, DXDY= -93,
Byx= -0.6643, Bxy= -0.2337 , Y=-0.6643x+59.2576, X= -0.2337y+40.8806. r2=0.1552, r = 0.394
Answer) X=180, Y=360, Dx-0 , Dy-0, dx2-120,dy2-346, DXDY-193,
Byx-0.6132, Bxy-1.361, Y=1.6083x+7.8340, X= 0.5578y-2.312 . r2=0.9471
Answer) X=650, Y=650, Dx-0 , Dy-0, dx2-894,dy2-1752, DXDY= 1044,
Byx= 1.168, Bxy= 0.596 , Y= 96.536, X= 70.96.

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