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Linear Regression
relationship between two or more variables. It involves
using an independent or known variable to predict the
dependent or response variable. You can demonstrate the
relationship by drawing a straight line on a graph, where
the independent variable is on the y-axis.
An example is determining the effects of different doses
of medication whereby the doses are the independent
variable, and the effects are the dependent variable.
There are two main types of linear regression. They are:
SIMPLE
This type involves estimating the relationship between two quantitative
variables, such as the value of a dependent variable at a particular
value of the independent variable.
An example is determining the number of sales when customer
engagement on social media is at a certain percentage.
MULTIPLE
In this type, you can determine the relationship between several
independent variable.
An example is determining how the price of a product, interest rates
Application of Linear Regression
Market Analysis
You can use a regression model to determine how products perform in
the market by establishing the relationships between several
quantitative variables, such as social media engagement pricing and
number of sales. This information allows you to utilize specific
marketing strategies to maximize sales and increase revenue.
For example, you can use a simple linear model to ascertain how price
affects sales and use it to evaluate the strength between the two
variables.
Financial Analysis
Financial analysis use linear models to evaluate a company’s
operational performance and forecast returns on investment. They
also use it in the capital asset pricing model, which studies the
relationship between the expected investment returns and the
associated market risks. It shows companies if an investment has a
fair price and contributes to decisions on whether or not to invest in
the asset.
Sports Analysis
This involves sports analysis using statistics to determine a team’s or
player’s performance in a game. They can use this information to
compare teams and players and provide essential information to their
followers. They can also use this data to predict game attendance based
on the status of the teams playing and the market size, so they can
advise team managers on game venues and ticket prices that can
maximize profits.
Environmental Health
Specialists in this field use this regression model to evaluate the
relationship between natural elements, such as soil, water and air.
An example is the relationship between the amount of water and
plant growth. This can help environmentalists predict the effects of
air or water pollution on environmental health.
MEDICINE
Medical researchers can use this regression model to determine the
relationship between independent characteristics, such as age and body
weight, and dependent ones, such as blood pressure. This can help
reveal the risk factors associated with diseases. They can use this
information to identify high-risk patients and promote healthy
lifestyles.
Multiple Regression
Application Predicting house prices based on various factors like
square footage, number of bedrooms and locations.
Example :
Analyzing the impact of variables such as income, education, and job
satisfaction on overall life satisfaction.
LOGISTIC REGRESSION
Application Predicting whether a customer will buy a product (binary
outcome) based on factors like age, income and previous purchase
history.
Example:
Assessing the likelihood of a student passing or failing an exam based
on study hours, attendance, and previous grades.
Simple Linear Regression