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org/statistics-for-data-science/
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Statistical Analysis or Modeling in Data Analysis
Statistical analysis or modeling involves using mathematical techniques to extract meaningful insights
from data. This can include identifying patterns, relationships, and trends, or making predictions
about future outcomes. It plays a crucial role in decision-making, research, and business intelligence.
1. Statistical Analysis
Statistical analysis involves applying various statistical tests and methods to interpret data, check for
significance, and validate hypotheses.
Types of Statistical Analysis:
✅ Descriptive Statistics: Summarizes data using measures such as mean, median, mode, variance,
and standard deviation. Example: Finding the average sales per month.
✅ Inferential Statistics: Draws conclusions about a population based on a sample using hypothesis
testing and confidence intervals. Example: A/B testing in marketing to compare two advertisement
strategies.
✅ Correlation & Regression Analysis: Determines relationships between variables.
Correlation: Measures the strength of the relationship between two variables. Example:
Relationship between temperature and ice cream sales.
Regression: Predicts the dependent variable based on one or more independent variables.
Example: Predicting house prices based on size, location, and number of rooms.
✅ Time Series Analysis: Analyzes data points collected over time to identify trends, seasonality, and
cycles. Example: Stock market price predictions.
✅ ANOVA (Analysis of Variance): Compares means of multiple groups to determine if differences are
statistically significant. Example: Comparing customer satisfaction scores across different store
locations.
✅ Chi-Square Test: Checks the association between categorical variables. Example: Analyzing
whether gender influences product preference.
2. Predictive Modeling
Predictive modeling involves using statistical and machine learning algorithms to forecast future
trends based on historical data.
Common Predictive Models:
📌 Linear Regression: Predicts a continuous value based on independent variables. Example:
Predicting sales based on marketing spend.
📌 Logistic Regression: Used for binary classification (Yes/No, 0/1). Example: Predicting whether a
customer will churn.
📌 Decision Trees & Random Forest: Tree-based models that classify or predict outcomes. Example:
Predicting loan approval based on credit history.
📌 Time Series Forecasting: ARIMA, Exponential Smoothing, and LSTMs are used for future trend
forecasting. Example: Predicting next quarter’s revenue.
📌 Clustering (K-Means, DBSCAN): Groups data points based on similarity. Example: Customer
segmentation for targeted marketing.
📌 Neural Networks & Deep Learning: Advanced models used for complex pattern recognition.
Example: Image classification or fraud detection.
3. Choosing the Right Approach
Use statistical analysis when testing hypotheses, analyzing distributions, or determining
relationships.
Use predictive modeling when the goal is to forecast trends, classify outcomes, or optimize
business strategies.
Let's go through an example where we perform statistical analysis and predictive modeling using
Python.
Problem Statement:
We have a dataset containing information about a company's advertising budget for TV, Radio, and
Newspaper ads, and we want to:
1. Perform statistical analysis to check correlations.
2. Build a predictive model to predict sales based on advertising spending.
Step 1: Import Libraries and Load Data
import pandas as pd
import numpy as np
import seaborn as sns
import [Link] as plt
from sklearn.model_selection import train_test_split
from sklearn.linear_model import LinearRegression
from [Link] import mean_squared_error, r2_score
# Load dataset (Example dataset)
url = "[Link]
data = pd.read_csv(url)
# Display first 5 rows
print([Link]())
Step 2: Perform Statistical Analysis
# Summary statistics
print([Link]())
# Check correlation between features
[Link](figsize=(8,5))
[Link]([Link](), annot=True, cmap="coolwarm", fmt=".2f")
[Link]("Correlation Matrix")
[Link]()
🔹 Insights from Correlation Matrix:
TV and Sales have a strong positive correlation.
Radio also impacts Sales but less than TV.
Newspaper has a weaker correlation.
Step 3: Build a Predictive Model (Linear Regression)
# Define independent (X) and dependent (y) variables
X = data[['TV', 'Radio', 'Newspaper']]
y = data['Sales']
# Split data into training and testing sets (80-20 split)
X_train, X_test, y_train, y_test = train_test_split(X, y, test_size=0.2, random_state=42)
# Train the Linear Regression Model
model = LinearRegression()
[Link](X_train, y_train)
# Predict on test set
y_pred = [Link](X_test)
# Evaluate Model Performance
mse = mean_squared_error(y_test, y_pred)
r2 = r2_score(y_test, y_pred)
print(f"Mean Squared Error: {mse:.2f}")
print(f"R² Score: {r2:.2f}")
Step 4: Interpret the Model
# Print Coefficients
coefficients = [Link]({'Feature': [Link], 'Coefficient': model.coef_})
print(coefficients)
🔹 Insights from Model Coefficients:
TV has the highest coefficient, meaning it has the most impact on sales.
Radio contributes positively, but less than TV.
Newspaper has the lowest impact (which aligns with the correlation analysis).
Conclusion
✔ Statistical Analysis (correlation matrix) helped identify important features.
✔ Predictive Modeling (Linear Regression) created a model to estimate future sales based on ad
spending.
✔ Model Evaluation (R² Score) shows how well the model explains variability in sales.
