Scribd
Upload
4 views

7. Chapter 14 Simple Linear Regression .

The document discusses Simple Linear Regression, focusing on the relationship between dependent and independent variables for predicting outcomes. It explains correlation measurement, types of correlation, and methods for estimating and predicting values using regression models. Additionally, it covers the importance of confidence and prediction intervals in statistical analysis.

Uploaded by

11230402
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
4 views

7. Chapter 14 Simple Linear Regression .

The document discusses Simple Linear Regression, focusing on the relationship between dependent and independent variables for predicting outcomes. It explains correlation measurement, types of correlation, and methods for estimating and predicting values using regression models. Additionally, it covers the importance of confidence and prediction intervals in statistical analysis.

Uploaded by

11230402
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 39

Simple Linear Regression

Dr. Bui Thanh Tu


Real life problems
Managerial decisions often are based on the relationship
between two or more variables.
Example: Relationship between
Expenditures and sales
Public utility and temperature
Purpose:
Predict value of one variable given value of one
variable
How:
Need to judge how two variable are related
(correlated) => That procedure is called regression
analysis

Regression terminology:
Dependent variable: variable being predicted
Independent variable: Being used to predict value
of dependent variable
Measuring Correlation
You’re used to use qualitative terms such as “positive correlation” and “negative
correlation” and “no correlation” to describe the type of correlation, and terms such as
“perfect”, “strong” and “weak” to describe the strength.
The Product Moment Correlation Coefficient is one way to quantify this:

Perfect Strong No correlation Weak Perfect


negative negative positive positive
Scatter diagram
A typical way of showing the correlation
between two related variables is on a scatter
diagram, plotting a number of pairs of data on
the graph
Types of correlation
Two variables can be one of the following
o 1 Perfectly correlated
o 2 Partly correlated
o 3 Uncorrelated

o 1 Perfectly
correlated
No correlation 2 Partly correlated
Correlation

Properties
• r is always a number between -1 and 1.
• r > 0 indicates a positive association.
• r < 0 indicates a negative association.
• Values of r near 0 indicate a very weak linear relationship.
• The strength of the linear relationship increases as r moves away from 0 toward -1 or 1.
• The extreme values r = -1 and r = 1 occur only in the case of a perfect linear relationship.
Definition
A positive correlation exists when as one variable decreases, the other variable also
decreases and vice versa.

A negative correlation exists when as one variable decreases, the other variable
increases and vice versa.
Example
Solution
The following instructions are for the Casio ClassWiz.
6: Statistics Press MODE then select ‘Statistics’.

Data Entry

PMCC
The coefficient of determination
Solution
Lines of best fit
The correlation coefficient measures the The scattergraph method
degree of correlation between two
variables, but it does not tell us how to
predict values for one variable y given
values for the other variable x. To do
that, we need to find a line which is a
good fit for the points on a scatter
graph, and use that line to find the value
of y corresponding to each given value
of x.

There are two methods to find such a


line: the scatter graph method and the
linear regression method.

Figure: An example of scattergraph method


Linear regression using the least squares method
Solution
Solution
Homework
Solution
Solution
Solution

Homework:
Page 608: Problems 5, 9 and 13
Page 619: Problems 19 and 21.
Simple Linear Regression Model
The equation that describes how y is
related to x and an error term is called
the regression model

26
26
Model Assumptions
Estimation and Prediction
If a significant relationship exists between x and y
and the coefficient of determination shows that
the fit is good, the estimated regression equation
should be useful for estimation and prediction.

26
Point estimators and predictors do not provide any information about the precision associated with the
estimate and/or prediction. We must develop confidence intervals and prediction intervals.
A confidence interval is an interval estimate of the mean value of y for a given value of x.
A prediction interval is used whenever we want to predict an individual value of y for a new observation
corresponding to a given value of x.

Example: Problem 35, page 637.


Homework: Problem 37, page 638.
Exercise
The following data are the monthly salaries y and
the grade point averages x for students who
obtained a bachelor’s degree in business
administration.
Exercise
The following data are the monthly salaries y and
the grade point averages x for students who
obtained a bachelor’s degree in business
administration.
d. As expected, the prediction interval is
much wider than the confidence interval.
This is due to the fact that it is more difficult
to predict the starting salary for one new
student with a GPA of 3.0 than it is to
estimate the mean for all students with a
GPA of 3.0.
Testing for Significance
T Test
Exercise
Exercise
Solution

You might also like