Regression

Regression
Quantitative Aptitude & Business Statistics
Regression
Regression
is the measure of
average relationship between two
or more variables in terms of
original units of the data.
Quantitative Aptitude & Business Statistics:

Regression
Regression
analysis is a statistical
tool to study the nature and extent
of functional relationship between
two or more variables and to
estimate the unknown values of
independent variable.

Regression
Dependent
variable :The Variable

Which is predicted on the basis of
another variable is called
Dependent variable or explained
variable .
Independent variable :The Variable
Which is used to predict another
variable is called independent
variable or explanatory variable.
Regression
Uses of
Regression Analysis
1.Regression line facilitates to

predict the values of a dependent
variable from the given value of
independent variable.
2.Through Standard Error facilitates
to obtain a measure of the error
involved in using the regression
line as basis for estimation.
Regression
3.Regression coefficients (bxy and

byx) facilitates to calculate
coefficient of determination (r2)
and coefficient of correlation.
4.Regression Analysis is highly
useful tool in economics and
business.
Regression
Distinction between Correlation and

Regression
Correlation
Regression
1. Correlation
measures degree and
direction of
relationship between
variables.
1. Regression
measures nature and
extent of average
relationship between
two or more variables.
2.It is a relative measure

showing association
between variables.
2.It is an absolute
measure relationship.

Regression
Correlation
Regression
3. Correlation
3. Regression Coefficient
Coefficient is
is independent of origin
independent of both but not scale.
origin and scale.
4. Correlation
Coefficient is
independent of
units of
measurement.
4.Regression Coefficient
is not independent of
units of measurement.
Regression
Correlation
5.Correlation
Coefficient is
lies between -1 and
+1.
Regression
5. Regression equation
may be linear or nonlinear .
6. It is not
6.It is a forecasting
device.
forecasting device.

Regression
Regression lines
Regression line X on Y
X = a + bY
Where X= Dependent Variable

Y =Independent variable
a=intercept and b= slope

Regression
10
Another way of regression line X on Y
X X = bxy Y Y
x
X X =r
Y Y
y
Regression
11
Regression coefficients
There are two regression coefficients byx and

bxy
The regression coefficient Y on X is
by x = r .
The
y
x
regression coefficient X on Y is
bxy
x
= r.
y

Regression
12
Regression coefficients
The
regression coefficient X on Y is
bxy
x
= r.
y

Regression
13
Regression line Y on X
Y = a + bX
Where Y= Dependent Variable
X =Independent variable
a=intercept and b= slope

Regression
14
Another way of regression line Y on X
Y Y = byx X X
y
(
Y Y = r
X X)
x
Regression
15
Properties of Linear Regression

Two
Regression Equations.
Product of regression coefficient.
Signs of Regression Coefficient
and correlation coefficient.
Intersection of means.
Slopes .
Regression
16
Angle between Regression lines

Value of r
a)
If r=0
b)
If r=+1 or -1
Angle between
Regression Lines
Regression lines are
perpendicular to each
other.
Regression lines are
coincide to become
identical .

Regression
17
Properties of regression coefficients

1.Same Sign.
2.Both cannot greater than one .
3.Independent of origin but not of scale .
4.Arithmetic mean of regression coefficients
are greater than Correlation coefficient.
5.r,bxy and byx have same sign.
6 .Correlation coefficient is the Geometric
Mean (GM) b/w regression coefficients.
Regression
18
Independent of origin but not of

scale.
This property states that if the original pairs of

variables is (x,y) and if they are changed to the
pair (u,v), where x=a + p u and y=c +q v
or
q
xa
u=
and
p
y c
v=
q
buv =
b vu
bxy and
p
q
= b yx
p

Regression
19
Normal Equations
Regression line Y on X
Y = a + bX
The two normal Equations are
Y = Na + b X
XY = a X + b X
Regression
2
20
Calculate byx
byx =
X Y
XY
N
X
(
)
X N
2
a = Y bX
Regression
21
Normal Equations
X = a + bY
The two normal Equations are

X = Na + b Y
XY = a Y + b Y
Regression
2
22
Calculate bxy
bxy =
X Y
XY
N
Y
(
)
Y N
2
a = X bY
Regression
23
Population Linear Regression Model
Relationship between variables is described

by a linear function
The change of the independent variable
causes the change in the dependent variable
Y-Intercept
Y =
Dependent
(Response)
Variable
Random
Error
Slope
a
bx
+ i
Independent
(Explanatory)
Variable

Regression
24
Sample Linear Regression
Using Ordinary Least Squares (OLS), we can find the

values of a and b that minimize the sum of the
squared residuals:
(
n
Yi Yi
)=
e
2
=i 1 =i 1
2
i
Partial Differentiate w.r.t parameters a and b then ,we

will get the two normal equations
Y = Na + b X
2
XY
=
a
X
+
b
X

Regression
25
From the following Data Calculate

Coefficient of correlation
X
Advertisement
Exp. (Rs. lakhs)
Y
10
Sales
(Rs.lakhs)
20
30
50
40

Regression
26
a .Find out Two Regression

Equations
b. calculate coefficient of correlation
c.Estimate the likely sales when
advertising expenditure is Rs.7 lakhs.
d. What should be the advertising
expenditure if the firm wants to attain
sales target of Rs.80 lakhs.

Regression
27
1
2
3
4
5
10
20
30
40
50
1
4
9
16
25
100
400
900
1600
2500
10
40
90
160
250
=15
=150
=55
=5500
=550

Regression
XY
28
Regression Equation of X on Y :
X c=a + b Y
Then the normal Equations are
X = Na + b Y
2
XY
=
a
Y
+
b
Y
Substituting the values in the above

equations:
1
15=5a+150b
550=150a+5500b
Regression
2
29
Regression Equation of Y on X :
Yc=a + b X
Then the normal Equations are
Y = Na + b X
XY = a
Substituting the values in the above

equations:
1
150=5a+15b
550=15a+55b
Regression
X+b
X2
2
30
X c = 0.01Y
Regression line Yon X
Yc = 10X
Correlation coefficient r=1.0

Regression
31
c) Sales (Y) when the advertising 7

Expenditure (X) is Rs.7lakhs
Y=10x=10*7=70
d) Advertising Expenditure (X) to attain
sales (Y) target of 80lakhs.
X=0.1Y=0.1*80=8.0

Regression
32
Measure of Variation:
The Sum of Squares
SST
Total
=
Sample
Variability
SSR
Explained
Variability
SSE
Unexplained
Variability

Regression
33
Measure of Variation:
The Sum of Squares
SST = Total Sum of Squares

Measures the variation of the Yi values
around their mean Y
SSR = Regression Sum of Squares
Explained variation attributable to the
relationship between X and Y
SSE = Error Sum of Squares
Variation attributable to factors other
than the relationship between X and Y
Regression
34
Coefficient of determination(r2)
The coefficient of determination is the square

of the coefficient of correlation. It is equal to
r2 .
The maximum value of r2 is unity and in the
case of all the variation in Y is explained by
the variation in X ,it is defined as
Coefficient of determination( r2 )
=
Explained var inace

TotalVaria nce

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35
Coefficient of non-determination(k2)
Coefficient of non-determination(k2)=1-r2
Un exp lained var inace
=
TotalVaria nce

Regression
36
Example
In a partially destroyed record the
following data are available :
Variance of x =25,
Regression equation of X on Y : 5X-Y=22
Regression equation of Y on X :
64X-45Y=24
Find
a) Mean values of X and Y ;
b) Coefficient of correlation between x and Y
c) Standard deviation of Y

Regression
37
Solution
A) the mean values of X and Y lie on the

regression lines and are obtained by solving
the given regression equations.
5x y = 22
64x 45y = 24
Multiplying (1) by 45 ,we get

225x 45y = 990
Regression
3
38
Subtracting (2) from (3)

161x = 96
x=6
Putting x = 6 in (1) ,we get ;
30 y = 22
y =8

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39
B) the regression equation y on x is :

64x-45y=24
64
y =
x
45
8
+
y =
15
64
by x =
65
24
25
64
x
65

Regression
40
Again regression equation x on y is 5x-y=22

22 1
+ x
x=
25 5
1
b xy =
5
r = bxy .b yx
64 1 8
=
. =
45 5 15
+ve sign with r is taken as both the regression

coefficients bxy and byx are positive
Regression
41
Solution
Now it is given that

V (x ) = x2 = 25
8
64
x = , b yx =
15
45
y
b yx = r .
x
64 8 y
40
=
y =
= 13.33
45 15 5
3
Regression
42
Example
If the relationship between x and u

is u+3x=10 between two other
variables y and v is 2y+5v=25 ,and
the regression coefficient of y on x
is known as 0.80,what would be the
regression coefficient v on u ?

Regression
43
Solution
Given u+3x=10
u=10-3x
2y+5v=25
b yx
q
= b vu
p
10
u =
1
25
2
v =
5
5 2
b vu
1
3
2
8
=
=
b
0
.
80
vu Statistics:
Quantitative Aptitude & Business
15
75
Regression
0.80 =
44
1.bxy and byx are

(a) independent of both change of scale and
origin
(b) independent of the change of scale and
not of origin
(c)independent of the change of origin and
not of scale
(d) neither independent of change of scale
nor of origin
Regression
45
1.bxy and byx are

(a) independent of both change of scale
and origin
(b) independent of the change of scale
and not of origin
(c) independent of the change of origin
and not of scale
(d) neither independent of change of scale
nor of origin
Regression
46
2.bxy measures
(a) the changes in y corresponding to a
unit change in x
(b) the changes in x corresponding to a
unit change in y
(c) the changes in xy
(d) the changes in yx
Regression
47
2.bxy measures
(a)the changes in y corresponding to
a unit change in x
(b)the changes in x corresponding to
a unit change in y
(c) the changes in x y
(d)the changes in y x
Regression
48
3.The coefficient of determination is defined by

the formula
un exp lained var iance
2
(a) r =1
total var iance
(b)
r2 =
exp lained var iance

total var iance
(c) both
(d) none of these
Regression
49
3.The coefficient of determination is defined by

the formula
un exp lained var iance
(a) r2= 1
total var iance
(b) r2=
exp lained var iance

total var iance
( c) both
(d) none of these
Regression
50
4.The method applied for driving the regression

equations is known as
(a) least squares
(b) concurrent deviation
(c) product moment
(d) normal equation

Regression
51
4.The method applied for driving the

regression equations is known as
(a) least squares
(b) concurrent deviation
(c) product moment
(d) normal equation
Regression
52
5.The two lines of regression become

identical when
(a) r=1
(b) r=1
(c) r=0
(d) (a) or (b)
Regression
53
5.The two lines of regression become

identical when
(a) r=1
(b) r=1
(c) r=0
(d) (a) or (b)
Regression
54
6.The term regression was first used in

the year 1877 by _____
(a) Karl Pearson
(b) A. L. Bowley
(c) R. A. Fisher
(d) Sir Francis Galton
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55
6.The term regression was first used in

the year 1877 by _____
(a) Karl Pearson
(b) A. L. Bowley
(c) R. A. Fisher
(d) Sir Francis Galton
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56
7.If regression lines are perpendicular

to each other, the value of r will be __
(a)+1
(b)1
(c) 0
(d) none of these
Regression
57
7.If regression lines are perpendicular

to each other, the value of r will be __
(a) +1
(b) 1
(c) 0
(d) none of these
Regression
58
8.X=50; Y=30; XY=1000;

X2=3000; Y2=180; n=10, the value
of byx will be
(a)0.6132
(b)1.3636
(c) 0.3090
(d) none of these
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59
8.X=50; Y=30; XY=1000;

X2=3000; Y2=180;n=12,the value of
byx will be
(a) 0.6132
(b)
1.3636
(c) 0.3090
(d)none of these
Regression
60
9.The standard error of an estimate is

Zero ,r will be--A) 1
B)+1
C)-1
D) none of these
Regression
61
9.The standard error of an estimate is

Zero ,r will be--A) 1
B)+1
C)-1
D) none of these
Regression
62
10.If there are two variables x and

y,then the number of regression
equations could be
A)1
B)2
C) Any number
D)3
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63
10.If there are two variables x and

y,then the number of regression
equations could be.
A)1
B)2
C) Any number
D)3
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64
11. The regression coefficients are

Zero if r is equal to----A) 2
B) -1
C) 1
D) 0
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65
11 The regression coefficients are Zero

if r is equal to----A)2
B)-1
C)1
D)0
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66
12 .When r =0 then Cov(x,y)----is equal

to
A) +1
B) -1
C) 0
D) 3
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67
12 .When r =0 then Cov(x,y)----is equal

to
A)+1
B)-1
C)0
D)3
Regression
68
13.If r=1 ,then the standard error of

estimate will be
A) Zero
B)+1
C) -1
D) none of these
Regression
69
13.If r =1 ,then the standard error of

estimate will be
A) Zero
B)+1
C) -1
D) none of these
Regression
70
14.If bxy=+0.8,then the value of byx

can be
A)+1.25
B)-1.25
C)+1.26
D)-1.24
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71
14.If bxy=+0.8,then the value of byx

can be
A)+1.25
B)-1.25
C)+1.26
D)-1.24
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72
15 ____Gives the mathematical

relationship between the variables.
A) Correlation
B) Regression
C) Both
D) None
Regression
73
15 ____Gives the mathematical

relationship between the variables.
A) Correlation
B) Regression
C) Both
D) None
Regression
74
16. Equations of two lines of

regression are 4x+3y+7 = 0 and 3x+
4y + 8 = 0, the mean of x and y are
A) 5/7 and 6/7
B) 4/7 and 11/7
C) 2 and 4
D) None of these
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75
16. Equations of two lines of regression are

4x+3y+7 = 0 and 3x+ 4y + 8 = 0, the mean of
x and y are
A) 5/7 and 6/7
B) 4/7 and 11/7
C) 2 and 4 c
D) None of these
Regression
76
17. Two lines of regression are given by

5x+7y22=0 and 6x+2y22=0. If the variance
of y is 15, find the standard deviation of x?
5
A)
7
B)
C)
6
8
D)
Regression
77
17. Two lines of regression are given by

5x+7y22=0 and 6x+2y22=0. If the variance
of y is 15, find the standard deviation of x?
5
A)
7
B)
C)
6
8
D)
Regression
78
18. If 2x + 5y 9 = 0 and 3x y 5 = 0 are two

regression equation, then find the value of
mean of x and mean of y.
A) 2,1
B) 2,2
C) 1,2
D) 1,1
Regression
79
18. If 2x + 5y 9 = 0 and 3x y 5 = 0 are two

regression equation, then find the value of
mean of x and mean of y.
A) 2,1
B) 2,2
C) 1,2
D) 1,1
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80
19. If one of the regression coefficients is

greater than unity, then other is less than
unity.
A) True
B) False
C) Both
D) None of these
Regression
81
19. If one of the regression coefficients is

greater than unity, then other is less than
unity.
A) True
B) False
C) Both
D) None of these
Regression
82
20. The two regression lines obtained from

certain data were y = x + 5 and 16x = 9y 94.
Find the variance of x if variance of y is 16.
A) 4/16
B) 9
C) 1
D) 5/16
Regression
83
20. The two regression lines obtained from

certain data were y = x + 5 and
16x = 9y 94.
Find the variance of x if variance of y is 16.
A) 4/16
B) 9
C) 1
D) 5/16
Regression
84
21. For a mn two way or bivariate frequency

table, the maximum number of marginal
distributions is .
A) m
B) n
C) m +n
D) m .n
Regression
85
21. For a mn two way or bivariate frequency

table, the maximum number of marginal
distributions is .
A) m
B) n
C) m +n
D) m .n
Regression
86
THE END
Regression

Regression

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Regression

Quantitative Aptitude & Business Statistics

Quantitative Aptitude & Business Statistics:

Quantitative Aptitude & Business Statistics:

variable :The Variable

1.Regression line facilitates to

3.Regression coefficients (bxy and

Distinction between Correlation and

2.It is a relative measure

Quantitative Aptitude & Business Statistics:

Quantitative Aptitude & Business Statistics:

Where X= Dependent Variable

Quantitative Aptitude & Business Statistics:

Another way of regression line X on Y

There are two regression coefficients byx and

Quantitative Aptitude & Business Statistics:

Quantitative Aptitude & Business Statistics:

Where Y= Dependent Variable

Quantitative Aptitude & Business Statistics:

Another way of regression line Y on X

Properties of Linear Regression

Angle between Regression lines

Quantitative Aptitude & Business Statistics:

Properties of regression coefficients

Independent of origin but not of

This property states that if the original pairs of

Quantitative Aptitude & Business Statistics:

The two normal Equations are

The two normal Equations are

Population Linear Regression Model

Relationship between variables is described

Quantitative Aptitude & Business Statistics:

Sample Linear Regression

Using Ordinary Least Squares (OLS), we can find the

Partial Differentiate w.r.t parameters a and b then ,we

Quantitative Aptitude & Business Statistics:

From the following Data Calculate

Quantitative Aptitude & Business Statistics:

a .Find out Two Regression

Quantitative Aptitude & Business Statistics:

Quantitative Aptitude & Business Statistics:

Substituting the values in the above

Substituting the values in the above

Regression line Yon X

Correlation coefficient r=1.0

c) Sales (Y) when the advertising 7

Quantitative Aptitude & Business Statistics:

Quantitative Aptitude & Business Statistics:

SST = Total Sum of Squares

The coefficient of determination is the square

Explained var inace

Quantitative Aptitude & Business Statistics:

Quantitative Aptitude & Business Statistics:

Quantitative Aptitude & Business Statistics:

A) the mean values of X and Y lie on the

Multiplying (1) by 45 ,we get

Subtracting (2) from (3)

Quantitative Aptitude & Business Statistics:

B) the regression equation y on x is :

Quantitative Aptitude & Business Statistics:

Again regression equation x on y is 5x-y=22

+ve sign with r is taken as both the regression

Now it is given that

If the relationship between x and u