Simple Linear Regression

Engr. Anna Liza Cao Nacion

BSIE 2C
September 22, 2021
18:00 – 19:30
 Understand the concepts and
Intended 01 application of regression
analysis

Learning 02 Calculate and display

regression statistics in Excel
Outcomes and Least Square Calculator

03 Evaluate regression model

04 Interpret regression results

• Infographic Style

INTRODUCTION
Simple Linear Regression
 LINEAR REGRESSION
Independent Variable Dependent Variable
(Predictor/ exogenous/ (Outcome/ endogenous/
regressor) regressand)

Simplest form:
Explain relationship
one-DV and one-IV
between DV and IV.

Basic PREDICTIVE Used continuous and

analysis normally distributed
variables
 OUTLIERS Reduce predictive
ACCURACY
Dependent
variable value
that is very
different to the
value
predicted. 02
Point that is
far away from
the
01 regression
line.
Major Uses of Regression Analysis

Determine
the Forecast Trend
strength of an effect forecasting
predictors
 PROCEDURE
4TH STEP
Testing the model’s prerequisites
3RD STEP
Conducting the hypothesis test
2ND STEP
Calculating the regression lines
1ST STEP
Hypothesis formulation
Linear Regression
It is used to predict the value of a
variable based on the value of
another variable.
 Step 1: Hypothesis Formulation

Null Alternative

NULL HYPOTHESIS ALTERNATIVE HYPOTHESIS

- Statement about - Statement about at least
regression coefficients one regression coefficients
(β0, β1) equal zero (β0, β1) is unequal zero
Step 2: Calculating the Regression Line

Least Squares
- Finding the “Line
of Best Fit”.

Least Squares Calculator (mathsisfun.com)

Excel: Data Analysis
EXAMPLE
 Quality of the Regression Model

R-Squared (Coefficient R-Squared Value: between 0 and 1

of Determination)

R-Squared value increases with the

number of Independent Variable.

R-Squared value is the square of

Correlation r value
STEP 3: Conducting the Hypothesis Test
Generalize the attribute onto the population.

State the Hypotheses Level of Significance Compute Test Statistic Make Decision

Criterion of Testing the Compare

State the Null and judgement upon regression model calculated value
Alternative which a decision as a whole with theoretical
hypothesis is made value
Step 4: Testing the Model’s Prerequisites

Random Sample
sample with n variance of the
observations variables
Linearity in the Conditional
expected Homoscedasticity
relationship
value
THANK YOU