Regression Analysis- In AI & machine learning, regression analysis is a statistical
technique and a Predictive modelling approach that predicts or forecasts continuous
numeric values based on the relationship between independent and dependent variables.
The main goal of regression analysis is to plot a line or curve that best fit the data and
to estimate how one variable affects another.
In machine learning, regression is a type of supervised learning. The key objective of
regression-based tasks is to predict output labels or responses. Regression models use
the input data features (independent variables) and their corresponding continuous
numeric output values (dependent or outcome variables) to learn ssociations between
inputs and corresponding outputs.
In R Programming Language, Regression is a statistical model which gives the
relationship between the dependent variables and independent variables. Regression
analysis is used in many fields like machine learning, artificial intelligence, data
science, economics, finance, real estate, healthcare, marketing, business, science,
education, psychology, sports analysis, agriculture, and many more. The main aim of
the regression analysis is to give the relationship between the variables, nature, and
strength among the variables, and make predictions based on the model.
Types of regression analysis
1. Simple Linear Regression
In this there is only one dependent and one independent variable. This mpodel has only
one predictor; it gives the linear relationship between the dependent and independent
variables. It is one of the most commonly used regression analysis.
This simple linear regression analysis is mostly used in weather forecasting, financial
analysis, market analysis. It can be used for the predicting outcomes, increasing the
efficiency of the models, make necessary measures to prevent the mistakes of the model.
The mathematical equation for simple linear regression model is Y=a + bX
• where Y is a dependent variable
• X is an independent variable
• a, b are the coefficients. Bi slope of reg. line of Y on X
b is also called as slope, a is the intercept of the linear equation. The slope may be
positive or negative (i.e, value of a may be positive or negative).
Multiple Linear Regression- extends simple linear regression by using multiple
independent variables to predict target variable. For example, predicting the price of a
house based on multiple features such as size, location, number of rooms, etc. Steps to
perform this are similar to that of simple linear Regression but difference comes in the
evaluation process.
Practice Example for fitting linear regression equation y= a + bx
x 8 5 4 6 7 9 10 3 2 12
y 11 10 4 8 9 13 15 6 12 7
Example: Table shows the number of motor registrations in a certain territory for a
term of 5 years and the sale of tyres by a firm in that territory
Find the regression equation to estimate the sale of tyres when motor registration
is known. Estimate sale of tyres when registration is 850.
Solution: We take registrations as X and tyre sales as Y.
We need to find the regression line of Y on X of the type Y = a + bX
The regression line of Y on X is given by the equation:
Y = (1.4928 x 850) + 255. 04 = 1523.92 = 1524 tyres
Example: For some bivariate data, the following results were obtained
Coefficient of correlation between X, Y is given by r2 = byx . bxy
Since both regression coefficients are negative, we assign negative value to
correlation coefficient r, and so r = -0.5477.
Applications of Regression
• Forecasting or Predictive analysis − One of the important uses of regression is
forecasting or predictive analysis. For example, we can forecast GDP, oil prices, or,
in simple words, the quantitative data that changes with the passage of time.
• Error correction − In business, making correct decisions is equally important as
optimizing the business process. Regression can help us to make correct decision as
well as correct the already implemented decision.
• Economics − It is the most used tool in economics. We can use regression to
predict supply, demand, consumption, inventory investment, etc.
• Fintech Companies − A FINTECH company is always interested in minimizing
the risk portfolio and wants to know the factors that affect the customers. All these
can be predicted with the help of a regression model.