REGRESSION ANALYSIS

Presented by:Akansha Singh Abhishek Malhotra

4/15/2012

Akanksha Singh

What is Regression?

The statistical tool with the help of which we are in a position to estimate(or predict) the unknown values of one variable from known values of another variable is called regression.

Or

Regression is used to examine the relationship between one dependent and one independent variable. After performing an analysis, the regression statistics can be used to predict the dependent variable when the independent variable is known.

4/15/2012

Akanksha Singh

Theoretical Example:For example, a medical researcher might want to use body weight (independent variable) to predict the most appropriate dose for a new drug (dependent variable). The purpose of running the regression is to find a formula that fits the relationship between the two variables. Then you can use that formula to predict values for the dependent variable when only the independent variable is known. A doctor could prescribe the proper dose based on a person's body weight.

4/15/2012

Akanksha Singh

Importance of Regression
It provides estimates of values of the dependent variables from values of the independent values. The device used to accomplish the estimation procedure is the Regression Line. Regression analysis is to obtain a measure of the error involved in using the regression line as a basis of estimation. For this purpose Standard error of estimate is calculated . Regression analysis is to obtain a measure of the degree of association or correlation the exits between the two variable. The coefficient of determination is calculated for this purpose.

4/15/2012

Akanksha Singh

Tools of Regression: Regression Line Regression Equation

Regression line (known as the least squares line) is a plot of the expected value of the dependent variable for all values of the independent variable. Technically, it is the line that "minimizes the squared residuals". The regression line is the one that best fits the data on a scatter plot.

4/15/2012

Akanksha Singh

The Regression Equation :Regression equation are algebraic expessions of the regression lines.Since there are two regression lines,there are two
regression equation-the regression of X on Y is used to describe the variations in the values of X for given changes in Y and the regression equation of y on x is used to describe the variation in the values of Y for given changes in X.

4/15/2012

Akanksha Singh

Regression equation of Y on X

The regression equation of y on X is expressed as follows:

XY a X b X
X a bY

Y Na b X

Y a bX

The regression equation of X on Y is expressed as follows:

XY aY bY
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X Na bY

Akanksha Singh

Regression Equation of X and Y

X X bxy(Y Y )
bxy

xy y
2

Regression Equation of Y on X
Y Y byx( X X )

byx
4/15/2012

xy x
2

Akanksha Singh

 In the following table are recorded data showing the test scores made by salesman on an intelligent test and their weekly sales:
sales men Test score Sales( 000Rs ) 1 40 2.5 2 70 6 3 50 4 4 60 5 5 80 4 6 50 2.5 7 90 5.5 8 40 3 9 60 4.5 10 60 3

Calculate the regression equation of sales on test scores and estimate the probable weekly sales volume if a salesman makes a score of 100.
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salesmen Testscore X 1 2 3 4 5 6 7 8 9 10 N=10 40 70 50 60 80 50 90 40 60 60 X=600

X X

x2
400 100 100 0 400 100 900 400 0 0

Sales 2.5 6 4 5 4 2.5

x 5.5

Y Y

y2
2.25 4 0 1 0 2.25 2.25 1 .25 1 y2=14

xy 30 20 0 0 0 15 45 20 0 0 xy=130

-20 +10 -10 0 +20 -10 +30 -20 0 0 x=0

-1.5 +2.5 0 1 0 -1.5 1.5 -1 +0.5 -1 y=0

3 4.5 3.0

x2=2400 Y=40

4/15/2012

Akanksha Singh

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Y-4=0.054(X-60) Y=.76+0.054X Y=.76+0.054(100) =6.16

N 600 X 10 X 60

N 40 Y 10 Y 4

Thus the most probable weekly sales volume if salesman makes a score of 100 is 6.16 thousand rupees.

4/15/2012

Akanksha Singh

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