UNIT -1

1) What is Time series Analysis?

ANS:
Time series analysis is a specific way of analyzing a sequence of data points collected over
an interval of time. In time series analysis, analysts record data points at consistent intervals
over a set period of time rather than just recording the data points intermittently or randomly.

2) Give Some Applications of Time series from different fields.

ANS:
Applications of time series analysis :

● Time series in Financial and Business Domain:

time series analysis has become the intrinsic part of financial analysis and can be
used in predicting interest rates, foreign currency risk, volatility in stock markets and
many more.
Policymakers and business experts use financial forecasting to make decisions about
production, purchases, market sustainability, allocation of resources, etc.

● Time series in Medical Domain:

Time series analysis is also used in the medical field to monitor the heart rate of
patients who may be on certain medications to make sure that heart rate doesn’t
fluctuate too wildly during any given time of the day.

● Time series in Business Development: Time series forecasting helps businesses to

make informed business decisions, as the process analyzes past data patterns it can
be useful in forecasting future possibilitie.

● Time series in Weather:

Time series analysis is also used frequently by weatherman to predict what the
temperatures will be during different months and seasons throughout the year.

● Time series in Retail Sales:

Retail stores often use time series analysis to analyze how their total sales is
trending over time.
This allows retail stores to be able to more accurately predict what their sales will be
during an upcoming period and be able to more accurately predict how much
inventory and staff they’ll need during different periods of the year.

3) What are the components of a time series .

ANS:
The reasons or forces that change the attributes of a time series are known as the
Components of Time Series.

● Trend

● Seasonal Variations
 ● Cyclical Variations

● Random or Irregular Movements

4) explain the components of time series.

● Trend :
Trend shows a common tendency of data. It may move upward or increase or go
downward or decrease over a certain, long period of time.
The trend is a stable and long-term general tendency of movement of the data.
A Trend can be either linear or non-linear.

examples of trends include – the number of schools, agricultural production, increase

in population, etc. It is notable that the trend may move upward, go downward or
remain stable over different sections of time.

● Seasonal Variations :
Seasonal variations are changes in time series that occur in the short term, usually
within less than 12 months.
Seasonal variations occur due to natural or manmade forces or variations. The
numerous seasons and manmade variations play a vital role in seasonal variations.

Example: The crops depend on the season, the sales of A.C,s going up during the
summer and the use of umbrellas skyrocketing during the rainy season - all of these
are seasonal variations.

● Cyclical Variations :
Variations in time series that occur themselves for the span of more than a year are
called Cyclical Variations.
Such oscillatory movements of time serious often have a duration of more than a
year.
Usually, cyclical variations occur due to a combination of two or more economic
forces and their interactions.

● Random or Irregular Movements :

There is another kind of movement that can be seen in the case of time series. It is
pure Irregular and Random Movement.
Earthquakes, war, famine, and floods are some examples of random time series
components.

5) Define decomposition of Time series.

ANS:
Decomposition is a statistical task in which the Time Series data is decomposed into
several component or extracting seasonality, trend from a series data.
Components are Trend, seasonal Variations, cyclical variations and irregular components.
6) What are the models in time series .
ANS:
Additive model:
Additive Model are the one where the variance of data doesn’t change over different
values of the time series.

Yt= T+ S + C + I

Multiplicative modle :

Multiplicative Model are the one where as the data increases, so does the seasonal pattern
or the variance increases.

Yt = T•S•C•I