TIME SERIES ANALYSIS

KIT-601
DATA ANALYTICS
 INTRODUCTION
A time series is nothing but a sequence of various data points that occurred
in a successive order for a given period of time

Time-series data is a collection of data points over a set period. Time-series

analysis is a method of analyzing data to extract useful statistical information
and characteristics. One of the study's main goals is to predict future value.
When forecasting with time series analysis, which is extremely complex,
extrapolation is required. However, the forecasted value and the associated
uncertainty estimation can make the result extremely valuable.
 INTRODUCTION…
Time-series analysis is a method of analyzing a collection of data points over a
period of time. Instead of recording data points intermittently or randomly, time
series analysts record data points at consistent intervals over a set period of time.
• Time series data: It is a collection of observations on the values that a variable takes at various
points in time.

• Cross-sectional data: Data from one or more variables that were collected simultaneously.

• Pooled data: It is a combination of cross-sectional and time-series data.

 OBJECTIVES OF TIME SERIES ANALYSIS

• To understand how time series works and what factors affect a certain variable(s) at
different points in time.

• Time series analysis will provide the consequences and insights of the given
dataset’s features that change over time.

• Supporting to derive the predicting the future values of the time series variable.

• Assumptions: There is only one assumption in TSA, which is “stationary,” which

means that the origin of time does not affect the properties of the process under the
statistical factor.
 ANALYZE TIME SERIES

• To perform the time series analysis, we have to follow the following

steps:

• Collecting the data and cleaning it

• Preparing Visualization with respect to time vs key feature

• Observing the stationarity of the series

• Developing charts to understand its nature.

• Model building – AR, MA, ARMA and ARIMA

• Extracting insights from prediction

 SIGNIFICANCE OF TIME SERIES

TSA is the backbone for prediction and forecasting analysis, specific to time-based problem statements.

• Analyzing the historical dataset and its patterns

• Understanding and matching the current situation with patterns derived from the previous stage.

• Understanding the factor or factors influencing certain variable(s) in different periods.

With the help of “Time Series,” we can prepare numerous time-based analyses and results:-

• Forecasting: Predicting any value for the future.

• Segmentation: Grouping similar items together.

• Classification: Classifying a set of items into given classes.

• Descriptive analysis: Analysis of a given dataset to find out what is there in it.

• Intervention analysis: Effect of changing a given variable on the outcome

 C O M P O N E N T S O F T I M E S E R I E S A N A LY S I S

• TREND: In which there is no fixed interval and any divergence within the given dataset

is a continuous timeline. The trend would be Negative or Positive or Null Trend

• SEASONALITY: In which regular or fixed interval shifts within the dataset in a

continuous timeline. Would be bell curve or saw tooth

• CYCLICAL: In which there is no fixed interval, uncertainty in movement and its pattern

• IRREGULARITY: Unexpected situations/events/scenarios and spikes in a short time

C O M P O N E N T S O F T I M E S E R I E S A N A LY S I S
 T I M E S E R I E S A N A LY S I S E X A M P L E

Non-stationary data—that is, data that is constantly fluctuating over time or is affected by
time—is analyzed using time series analysis. Because currency and sales are always
changing, industries like finance, retail, and e-commerce frequently use time series
analysis.
Time series analysis can be used in -

• Rainfall measurements

• Automated stock trading

• Industry forecast

• Temperature readings

• Sales forecasting
 T I M E S E R I E S A N A LY S I S E X A M P L E

Consider an example of railway passenger data over a period of time.

• On the X-axis, we have years, and on the Y-axis, you have the number of passengers.

The following observations can be derived from

the given data.

1.TREND: Over time, an increasing or decreasing

pattern has been observed. The total number of
passengers has risen over time.

2.SEASONALITY: Cyclic patterns are the ones that

repeat after a certain interval of time. In the case of the
railway passenger, you can see a cyclic pattern with a
high and low point that is visible throughout the
interval.
 TIME SERIES ANALYSIS TYPES

• CLASSIFICATION: It identifies and assigns categories to the data.

• CURVE FITTING: It plots data on a curve to investigate the relationships between variables in the
data.

• DESCRIPTIVE ANALYSIS: Patterns in time-series data, such as trends, cycles, and seasonal
variation, are identified.

• EXPLANATIVE ANALYSIS: IT attempts to comprehend the data and the relationships between it
and cause and effect.

• SEGMENTATION: It splits the data into segments to reveal the source data's underlying
properties.
 TIME SERIES ANALYSIS MODELS ‘N’ TECHNIQUES

• BOX-JENKINS ARIMA MODELS: These univariate models are used to better understand a single
time-dependent variable, such as temperature over time, and to predict future data points of
variables. These models work on the assumption that the data is stationary. Analysts have to
account for and remove as many differences and seasonalities in past data points as they can.

• BOX-JENKINS MULTIVARIATE MODELS: Multivariate models are used to analyze more than one
time-dependent variable, such as temperature and humidity, over time.

• HOLT-WINTERS METHOD: The Holt-Winters method is an exponential smoothing technique. It

is designed to predict outcomes, provided that the data points include seasonality.
 NEED OF TIME-SERIES ANALYSIS

Time series analysis has a range of applications in statistics, sales, economics, and many more
areas.

• Features: Time series analysis can be used to track features like trend, seasonality, and
variability.

• Forecasting: Time series analysis can aid in the prediction of stock prices. It is used if you
would like to know if the price will rise or fall and how much it will rise or fall.

• Inferences: You can predict the value and draw inferences from data using Time series
analysis.
 LIM ITAT IONS OF T IM E SERIES ANALYSIS

• Similar to other models, the missing values are not supported by TSA

• The data points must be linear in their relationship.

• Data transformations are mandatory, so they are a little expensive.

• Models mostly work on Uni-variate data.

THANK YOU