Introduction to Linear Regression Analysis

Linear regression is a widely used supervised learning algorithm for various applications. The
advantage of using linear regression is its implementation simplicity. A Linear regression algorithm is
widely used in the cases where there is need to predict numerical values using the historical data.

Suppose we have 20 years of population data and we are interested in predicting the population for
the next 5 years or we have product purchase data and we are interested to find the best selling
price by changing the product related features, linear regression will be the right choice to tackle this
kind of interesting problems.Even though we have a bunch of regression algorithms to predict
numerical values. Such as : Polynomial Regression, Stepwise Lasso Regression andElasticNet
Regression.

Linear regression mostly used method for solving linear regression kind of problems, because linear
regression needs less computational power compared to other regression methods and it’s the best
approach to find the relation between different attributes. Suppose finding the relation between
increase in temperature leads to increase in cool drinks or not.

Linear Regression line has the following properties:

1. The line minimizes the sum of squared differences between observed values (the y values)
and predicted values (the hθ(x) values computed from the regression equation).

2. The regression line passes through the mean of the X values (x) and through the mean of the
Y values ( hθ(x) ).

3. The regression constant (θ0) is equal to the y-intercept of the regression line.

4. The regression coefficient (θ1) is the average change in the dependent variable (Y) for a 1-
unit change in the independent variable (X). It is the slope of the regression line.