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AppLecture2

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Upasana Sharma
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6 views6 pages

AppLecture2

Uploaded by

Upasana Sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Decomposition of Time Series

Hypothetical Time Series and its components


Method of the free hand curve:

The secular trend is measured by the method of the free hand curve in the
following steps:

 Take the time periods along the X-axis by taking appropriate scaling
 Plot the points for observed values of the Y variable as the
dependent variable against the given time periods
 Join these plotted points by line segments to get a historigram
 Draw a free-hand smooth curve (or a straight line) through the histogram

In this method we draw the given times series data on graph paper, then we draw a
free-hand trend line through the plotted graph according to the trend of the graph.
Then we read trend values from this free-hand trend line.

It is generally preferred to use a curve instead of a straight line to show the secular
trend.

Merits (Free Hand Curve)

 The free-hand curve method is simple, easy, and quick for measuring secular
trends.
 A well-fitted trend line (or curve) approximates the trend closely based on a
mathematical model.

Demerits (Free Hand Curve)

 It is a rough and crude method.


 It is greatly affected by personal bias as different persons may fit different
trends to the same data.
The estimates are not reliable due to personal bias.

Question: The following time series shows the number of road accidents in Punjab
from 1972 to 1978.

Year 1972 1973 1974 1975 1976 1977 1978

No. of
2493 2638 2699 3038 3745 4079 4688
Accidents
 Obtain the historigram showing the number of road accidents and a free
hand trend line by drawing a straight line
 Find the trend values for this time series

Solution:

Year Value Total Mean Trend Value

1972 2493 2200

1973 2638 2550

1974 2699 2950

1975 3038 233380 3340 3340

1976 3745 3650


1977 4079 4050

1978 4688 4499

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