Regression Analysis

Regression Analysis, in general sense, means the

estimation or prediction of the unknown value of
one variable from the known value of the other
variable.
The Regression Analysis confined to the study of only
two variables at a time is termed as Simple
Regression. But quite often the values of a
particular phenomenon may be affected by
multiplicity of causes. The Regression analysis for
studying more than two variables at a time is
known as Multiple Regression.
In Regression Analysis there are two types of variables. The
variable whose value is influenced or is to be predicted
is called dependent variable. The variable which
influences the values or used for prediction is called
independent variable. The Regression Analysis
independent variable is known as regressor or
predictor or explanator while the dependent variable is
also known as regressed or explained variable.
If the given bivariate data are plotted on a graph, the points so
obtained on the diagram will more or less concentrate
around a curve, called the “Curve of Regression”. The
mathematical equation of the Regression curve, is called the
Regression Equation. If the regression curve is a straight
line, we say that there is linear regression between the
variables under study. If the curve of regression is not a
straight line, the regression is termed as curved or non-linear
regression.
Line of regression is the lines which gives the best estimate of
one variable for any given value of the other variable. In
case of two variable say x & y, we shall have two regression
equations; x on y and the other is y on x.
Line of regression of y on x is the line which gives the best
estimate for the value of y for any specified value of x.
Line of regression of x on y is the line which gives the best
estimate for the value of x for any specified value of y.
 r. бy
(y-y) = (x-x)
бx

LINES OF REGRESSION OF x on y

r. бx
(x-x) = (y-y)
бy
o When r=0 i.e., when x & y are uncorrelated, then the lines of
regression of y on x, and x on y are given as: y – y = 0 and x – x
= 0. The lines are perpendicular to each other.
o When r=+1 then the two lines coincide.
o If the value of r is significant, we can use the lines of regression
for estimation and prediction.
o If r is not significant, then the linear model is not a good fit and
hence the line of regression should not be used for prediction.
o bxy is the Coefficient of regression of x on y.
o byx is the Coefficient of regression of y on x.
r. бx Cov (x,y) r. бy Cov (x,y)
bxy = bxy = byx = byx =
бy б y
2 бx бx2

(x-x) = bxy (y-y) (y-y) = byx (x-x)

nΣxy - Σx.Σy Σdx.dy nΣxy - Σx.Σy Σdx.dy

bxy= 2 bxy = byx= 2 byx =
nΣy -(Σy) 2 Σdy 2
nΣx -(Σx)2 Σdx2
o The correlation coefficient is the Geometric Mean
between the Regression Coefficients i.e., r2= bxy byx
o The sign to be taken before the square root is same
as that of regression coefficients.
o If one of the regression coefficient is greater than
one, then the other must be less than one.
o The AM of the modulus value of regression
coefficients is greater than the GM of the
modulus value of the Correlation Coefficient.
o Regression coefficients are independent of
change of origin but not of scale.
X Y dx=X-X dy=Y-Y dx2 dy2 dxdy
91 71 1 1 1 1 1
97 75 7 5 49 25 35
105 69 18 -1 324 1 -18
121 97 31 27 961 729 837
67 70 -23 0 529 0 0
124 91 34 21 1156 441 714
51 39 -39 -31 1521 961 1209
73 61 -17 -9 289 81 153
111 80 21 10 441 100 210
57 47 -33 -23 1089 529 759
900 700 0 0 6360 2868 3900
 Σdx.dy Σdx.dy
bxy = byx =
Σdy2 Σdx2

3900 3900
bxy = 1.361 byx = 0.6132
2868 6360

(x-x) = bxy (y-y) (y-y) = byx (x-x)

(x-90) = 1.361(y-70) (y-70) = 0.6132 (x-90)

x=1.361y - 5.27 y=0.6132x + 14.812
o The data about the sales & advertisement expenditure of a
firm is given below:
Sales Advertmnt Expend.
Means 40 6
Standard Deviations 10 1.5
Coefficient of Correlation is 0.9
1. Estimate the likely sales for a proposed advertisement
expenditure of Rs. 10 crores.
2. What should be the advertisement expenditure if the firm
proposes a sales target of 60 crores of rupees?
 (x-x) = bxy (y-y) (y-y) = byx (x-x)

r. бx r. бy
byx =
bxy = бx
бy

(x-40) = (0.9*10/1.5) (y-6) (y-6) = (0.9*1.50/10) (x-40)

x = 6y+4 y = 0.135x+0.6

x = 6*10+4 y = 0.135*60+0.6

x = 64 y =8.7
o Point out the consistency, if any, in the following
statement:
“The Regression Equation of y on x is 2y+3x=4 and the
correlation coefficient between x & y is 0.8”
o By using the following data, find out the two lines of
regression and from them compute the Karl-Pearson’s
coefficient of correlation.
ΣX=250; ΣY=300; ΣXY=7900; ΣX2=6500; ΣY2=10000;
n=10
 nΣxy - Σx.Σy nΣxy - Σx.Σy
bxy = byx =
nΣy2 -(Σy)2 nΣx2 -(Σx)2

10*7900 – 250*300 10*7900 – 250*300

bxy = byx =
10*10000 -(300)2 10*6500 -(250)2

0.4 1.6

rxy 2
= bxy* bxy rxy 2
= 1.6* 0.4 rxy = 0.8
o Find the two regression coefficients and hence the r .
n=5; X=10; Y=20; Σ(X-4)2=100; Σ(Y-10)2=160; Σ(X-4)(Y-
10)=80
ANSWER:
U=X-4; U=X-4=6; ΣU= nU = 30. Similarly ΣV=50
nΣUV - ΣU.ΣV nΣUV - ΣU.ΣV
byx= byx=
nΣU2 -(ΣU)2 nΣV2 -(ΣV)2

5*80 – 30*50 = (11 5*80 – 30*50 = (11

byx= byx=
5*100 -(30)2 4) 5*160 -(50)2 17)

r = √(11/4)(11/17) = 1.33 ( it is impossible)