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Application of Regression Analysis

Regression Analysis

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Shekhar Shivam
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22 views8 pages

Application of Regression Analysis

Regression Analysis

Uploaded by

Shekhar Shivam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Application of

Regression
Analysis
Regression analysis is a powerful statistical technique that allows us to
understand the relationship between variables and make predictions. It has
a wide range of applications across various industries and fields of study.

by Shekhar Shivam
What is Regression Analysis?
1 Modeling Relationships 2 Predicting Outcomes 3 Identifying Drivers
Regression analysis helps us It allows us to use known values to Regression can help us identify
model the relationship between predict the value of the dependent the key factors that influence the
one or more independent variables variable. dependent variable.
and a dependent variable.
Assumptions of
Regression Analysis
Linearity Independence
The relationship between the The observations are
independent and dependent independent of each other and
variables is linear. not correlated.

Normality Homoscedasticity
The residuals (errors) are The variance of the residuals is
normally distributed with a mean constant across all levels of the
of 0. independent variables.
Simple Linear Regression
1 Model Equation
Y = a + bX, where Y is the dependent variable, X is the
independent variable, a is the intercept, and b is the slope.

2 Estimation
The coefficients a and b are estimated using the method of
least squares.

3 Interpretation
The slope b represents the average change in Y for a one-
unit change in X.
Multiple Linear Regression
Model Equation Interpretation Applications

Y = a + b1X1 + b2X2 + ... + bkXk, The regression coefficients b1, b2, ..., Multiple regression is useful when you
where Y is the dependent variable and bk represent the average change in Y have multiple factors that may influence
X1, X2, ..., Xk are the independent for a one-unit change in the the outcome of interest.
variables. corresponding X, holding all other X's
constant.
Interpreting Regression Outpu
1 Coefficient Estimates
The estimated regression coefficients and their statistical significance
provide insights into the relationships between variables.

2 R-squared
This statistic measures the proportion of the variance in the dependent
variable that is predictable from the independent variables.

3 Goodness of Fit
Additional metrics like p-values and confidence intervals help assess
the overall fit of the regression model.
Evaluating Model Fit

Diagnostics Validation Improvement


Residual plots, normality tests, and other Cross-validation techniques can be used If the initial model does not fit well, you
diagnostics help assess the validity of the to estimate the model's predictive can explore transformations, interactions,
model assumptions. performance on new, unseen data. or additional variables to enhance the
model.
Practical Applications of Regression Analysi
Business Finance Healthcare

Predict sales, optimize pricing, forecast Estimate risk, model investment returns, Identify risk factors, predict disease
demand, and analyze customer and analyze financial time series. outcomes, and optimize treatment
behavior. plans.

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