Lesson 4

Making Prediction using Regression

Analysis
 Gear Up
• If two values are significantly correlated, then
we can predict the value of one variable in
terms of the other variable
• For example, it is believed that the amount of
family income is related to the amount of
expenditures. If indeed there is a significant
relationship bet. these two variables, then we
can predict the amount of expenditures in
terms of family income or vice versa.
 Analyze and Explore
• There are many instances where we make predictions
to make sound decisions.
• Businessmen predict the future sales of the company
based on present productions.
• Manufacturers make predictions of their profit based
on the production cost.
• Guidance counselors predict scholastic or academic
success of the students, based on their scores in the
entrance exam.
• School administrators predict future expansions of
physical facilities based on student enrolment record.
• The process of predicting the value of one variable
in terms of the other variable is called REGRESSION
ANALYSIS.
• Simple Linear Regression –deals with only one
dependent and one independent variable.
• Multiple Linear Regression- deals with more than
one independent variable
• If we are going to predict one variable in terms of
the other variable, we have to make sure that the
variables are significantly correlated.
• We cannot do regression analysis without
performing correlation analysis first.
 The Regression Equation
• The graph of a regression equation is a line bec. it is
assumed that we are dealing with a linear relationship.
• The independent variable is sometimes called the
PREDICTOR VARIABLE or the EXPLANATORY VARIABLE
bec. it is used to predict or explain the dependent variable
• The dependent variable is sometimes called the
RESPONSE VARIABLE.
• Since the regression equation is used to predict the value
of the dependent variable in terms of the independent
variable, we use to indicate that it is not the actual value
but just the predicted value of Y.
 The Regression Equation

Where: - the y-intercept of the regression line

- slope of the regression line
- predicted value
– value of the independent variable
• The values of are found using the following
formulas.

Where X – independent variable

Y – dependent variable
Ex.1. The following data show the no. of years by which
the passenger jeepneys have been used and their
corresponding depreciated prices in thousands of
pesos.
Jeep Age in Years (X) Price in Php 1 000 (Y)
A 5 85
B 4 103
C 6 70
D 5 82
E 5 89
F 5 98
G 6 66
H 6 95
I 2 169
J 7 70
K 7 48
a. Compute the Pearson Product-Moment
Correlation Coefficient (r).
b. Describe the relationship between the age in
years and the price of the jeepneys based on
the computed r.
c. Test the significance of r at 0.05 level of
significance.
d. If r is significant, find the regression equation
for predicting the price of the jeepney in
terms of the age in years.
e. How much does it costs if the jeepney is 3
years of age? 9 years of age?
 Exercise
1. The following data show the IQ and examination scores in
Mathematics of selected students.
Student IQ (X) Score in Math (Y)
A 105 80
B 98 62
C 112 91
D 102 77
E 107 89
F 95 65
G 100 96
H 110 85
I 102 94
J 96 91
K 115 88
L 105 85
a. Construct a scatter plot for the data shown in the
table.
b. Compute the Pearson Product-Moment Correlation
Coefficient (r).
c. Describe the relationship between the IQ and the
examination score in Math based on the computed r.
d. Test the significance of r at 0.05 level of significance.
e. If r is significant, find the regression equation for
predicting the examination score in Math in terms of
IQ.
f. Graph the regression line on the same coordinate
system where you draw the scatter plot.
g. Predict the examination score in Math if the IQ is 90.