R square is known as determinant of correlation. It gives you the reliability of the prediction model.

Lm – linear model

Def : is used to build linear model using predictor and response variable this model can be used
further for prediction this function requires min. two arguments

1. Formula
2. Data

R^2 adjusted = (1-R^2) (N – 1)/N-p-1

Where R^2 = sample R – square

P = no. of predictors

N = total sample size

Multiple regression means many independent variables and one dependent variable. Many
predictors and 1 response

Time series analysis

A time series is a collection of observations made sequentially in a time.

Examples – Financial time series, scientific time series, demographic time series, meteorological time
series

Purpose of time series

To identify the components, the net effects of whose interaction is exhibited by the movement of
time series.

To isolate , study, analyse and measure them independently i.e, holding the other things constant

Uses of time series

To study the past behaviour of the variable

To formulate policy decisions and planning of future operations

To predict or estimate or forecast the behaviour of the phenomenon in future which is very essential
for business planning

To compare the changes in the values of different phenomenon at different times

Components of a time series

The pattern or behaviour of the data in a time series has several components

Theoretically, any time series can be decomposed into:

Secular trend or Long term movement

Periodic change or short term movement

I) Seasonal ii) cyclical

Irregular or random components

However, this decomposition is often not straight-forward because these factors interact

Trend component

The trend component accounts for the gradual shifting of the time series to relatively higher or
lower values over a long period of time

Trend is usually the result of long term factors such as changes in the population, demographics,
technology or consumer preferences

Periodic movements
Forces which prevent the smooth flow of the series in a particular direction and tend to repeat
themselves over a period of time

Seasonal variations or fluctuations

Cyclical variations or fluctuations

Seasonal variations

The component responsible for the regular rise or fall

T test

- Paired t test
- 2 independent sample t test