Regression Analysis

Presented By: Khushpreet Chawla

Introduction
The meaning of the regression is stepping back or going back. Regression analysis is the measure of the average relationship between

two or more variables.

For example we know that sales & advertising both are correlated, we

may find out the sales target.

expected amount of sales for a given advertising

expenditure or the required amount of expenditure for achieving a fixed

So the Statistical tool with the help of which we are in a position to

estimate or predict the unknown value of one variable from known values of another variable is called Regression.

Importance of Regression Analysis

It provides estimate of values of the dependent variables from values of

independent variables.

In the field of business, regression is very useful because with the help of

it a businessman can predicting investment, prices, profits, sales, etc.

future production, consumption,

In day to day life regression is also very useful. For example, when price is increase of a commodity then demand of the commodity is decline, or with the better monsoon the output of agriculture product increase.

Regression line:
We take the case of two variables X and Y. We shall have two

regression line of X on Y and the regression line of Y on X. The

regression line X on Y gives the most probable values of X for given

values of Y and the regression line Y on X gives the most probable values of Y for given values of X.
However, when there is either perfect negative correlation between

two variables, the two regression line will coincide.

Regression Equation
Regression equations are algebraic expression of the regression lines. Since

there are two regression lines there are two regression equations. Regression
equation of X on Y would be used to describe the variation in the values of X for given changes in the values of Y and similarly, the Regression equation of

Y on X would be used to describe the variation in the values of Y for given

changes in the values of X.
The regression equation X on Y expressed by Xc = a + bY and The regression

equation Y on X expressed by Yc = a + bX.

In above equations we calculate the value of a and b from the following equation:

X on Y

Y on X

Y na b X XY a X b X

X na b Y XY a Y b Y

Where: X = sum the value of X Y = sum the value of Y XY = sum of the product of X & Y X 2 = sum of the squares of X Y 2 = sum of the squares of Y a & b = both are the constant

Deviation from Arithmetic Mean Method

In this method take the deviation of actual value of X and from their mean. X on Y Y on X y x X X r Y Y Y Y r X X x y

Where:X = A.M. of X series

= A.M. of Y Series

x =S.D. of X series
r = coefficient of correlation

y = S.D. of Y series

Example:

The panel of two judges P & Q graded seven dramatic performances by independently awarding marks as follows
Performanc e Marks by P Marks by Q 1 46 40 2 42 38 3 44 36 4 40 35 5 43 39 6 41 37 7 45 41

The eight performances, which judge Q could not attend, was awarded 37 by Judge P. If Judge Q had also been present, how many marks would be expected to have been awarded by him to eight performance

Performance

Marks by P (X) 46 42 44 40 43 41 45

Deviation (X-X) x 3 -1 1 -3 0 -2 2

Marks by P (Y) 40 38 36 35 39 37 41

Deviation (Y-Y) Y 2 0 -2 -3 1 -1 3

xy

x2

y2

1 2 3 4 5 6 7
N=7

6 0 -2 9 0 2 6 xy

9 1 1 9 0 4 4
2

4 0 4 9 1 1 9
2

X =
301

x 0 Y =
266

y 0

=21

x =28 y=28

Y on X

(Y Y ) byx X X

(Y 38 ) 0.75 ( X 43) (Y 38 ) 0.75 X 32 .25 Y 0.75 X 5.75

The eight performances, which judge Q could not attend, was awarded 37 by Judge P. If Judge Q had also been present, how many marks would be expected to have been awarded by him to eight performance

N 301 X 7 X 43

N 266 Y 7 Y 38

by x by x by x

xy x
2

21 28 0.75

Y 0.75 (37 ) 5.75 Y 27 .75 5.75 Y 33 .50

Deviation from Assumed Mean Method

Following are the data of Heights of 10 fathers and their sons. Find out the regression equations from them.
Height of Father in Inches (X) Height of Son in Inches (Y)

62

64

66

67

68

69

71

72

73

63

62

65

67

70

70

67

68

71

dx (X-62) 0 2 4 5 6 6 7 9 10 11

dx2

dy (Y-62) 1 0 3 5 5 8 8 5 6 9

Dy2

dxdy

62 64 66 67 68 68 69 71 72 73
N= 10

0 4 16 25 36 36 49 81 100 121

63 62 65 67 67 70 70 67 68 71

1 0 9 25 25 64 64 25 36 81
2

0 0 12 25 30 48 56 45 60 99

dx
60

dx

468

dy 50 dy
=330

dxdy
375

Now we will calculate the arithmetic mean of X and Y and the regression coefficient of X on Y and Y on X.

dx X A
N 60 62 10 62 6 68
x y

dy Y A
N

50 62 10 62 5

bxy =

d d N d d d N d
x 2 y y

b yx =

375 10 60 50 2 330 10 50 3750 3000 3300 2500 750 0.94 800

d d N d d d N d
x y x 2 x x

67

375 10 60 50 2 468 10 60 3750 3000 4680 3600 750 0.7 1080

Now we calculate the regression equation:

X on Y

( X X ) bxy Y Y

Y on X

(Y Y ) byx X X

( X 68 ) 0.94 (Y 67 ) ( X 68 ) 0.94Y 62 .98 X 5.2 .94Y

(Y 67 ) 0.7( X 68 ) (Y 67 ) 0.7 X 47 .6 Y 19 .4 .7 X

References
Business Statistics of S.P.Gupta & M.P.Gupta. Fundamental of Statistics of D.N.Elahance & B.M.Agarwal.