Course no: FB-508

Course title: Business Statistics

Presented To:

Dr. Md. Main Uddin

Associate Professor
Department of Banking & Insurance
University Of Dhaka

Date of presentation: 12.12.2015

Presented by:

Md. Asaduzzaman Munshi 51530071

Md. Masum Billah 51530075
Tanjilal Aziz - 51531004
Fatema Mariom 51531028
Ismatara Ela - 51531016

Title

Regression and Correlation

Regression
Correlation

Regression
and
Correlation
The Following table gives information on GPAs and staring
Salaries (nearest thousand TK) of 30 recent college
graduates:

Calculation Table

Calculation

Calculation

Calculation

Calculation

Calculation

Calculated value

Regression Line
y = 10.31 + 12.67 x
Meaning of the values 10.31 and 12.67:-

The value of a= 10.31 is the value of y for x=0.

This represents that the starting salary is about
10310 TK for a college graduate with GPA of zero.
The value of b= 12.67 means that, on average,
the starting salary of a college graduate
increases by 12670 TK for every 1- point increase
in GPA.

Scatter plot and Regression

line

Other Calculated Value

Coefficient of Correlation, r

Coefficient of Correlation,

r = 0.83
This value indicates that the variables have a
strong positive linear relationship.

Coefficient of Determination, r2
Coefficient of Determination,
r2 = 0.72
This value indicates that 72% of the total
squared errors (SST) are explained by the
regression model.

Prediction Error
We see that if a student having GPA 3.25, he will
get a starting salary of TK 51.48(from the
regression equation) thousand, but the real is 52
thousand TK.
This is called the prediction error.

Standard Deviation Error, Se

Standard deviation error
Se = 4.25
This value indicates that the errors of the value
of y spreading 4.25 around the regression line for
the given
values of x

SST, SSE and SSR

Total Sum of Square, SST = 1831.86

Error Sum of Square, SSE = 507.46

Regression Sum of Square, SSR = 1323.83

The values of SST= 1831.86 and SSE= 507.48

indicate that the sum of squared errors
decreased from 1831.86 to 507.48 when we
used y in place of y to predict starting
salary. This reduction in squared error is SSR.

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