Project Report Advanced Statisics UMESHHASIJA SEPDSBBA 2021

Project: Advanced Statistics

Table of Contents
Contents
Problem 1A…………................................................................................................................................... 3
Introduction Anova.................................................................................................................................. 3
Q1.1 One Way Anova Hypothesis ............................................................................................................3
Q1.2 One Way Anova Salary: Education: .................................................................................................4
Q1.3 One Way Anova Salary: Occupation: .............................................................................................. 5
Q1.4 Turnkey HSD: .................................................................................................................................. 5
Problem 1B
Introduction ............................................................................................................................................. 6
Q1B.1 Interaction between variables Analysis .........................................................................................6
Q1B.2 Two Way Anova..............................................................................................................................7
Q1B.3 Business Implications......................................................................................................................8
Problem 2
Introduction Principal Component Analysis................................................................................................9
Q2.1 EDA Univariate and Bivariate Analysis ..............................................................................................10
Q2.2 Scaling Requirement .........................................................................................................................21
Q2.3 Comparing Covariance and Correlation Matrices..............................................................................22
Q2.4 Outlier Analysis..................................................................................................................................24
Q2.5 Eigen Values & Eigen Vectors............................................................................................................25
Q2.6 PCA Execution....................................................................................................................................28
Q2.7 Explicit form of first PC............................................................................ .........................................28
Q2.8 Cumulative Eigen Values............................................................................ ......................................29
Q2.9 Business Implications of PCA..................................................................... ......................................30
Q2.10 Business Implications for Case Study...................................................... ......................................31

ADVANCED STATISTICS PROJECT
REPORT
Umesh Kumar Hasija

DECEMBER 9, 2021
GREAT LEARNING

PREPARED BY – UMESH KUMAR HASIJA SEP 2021 BATCH

Problem 1A:
Introduction
Salary is hypothesized to depend on educational qualification and occupation. To understand
the dependency, the salaries of 40 individuals [SalaryData.csv] are collected and each person’s
educational qualification and occupation are noted. Educational qualification is at three levels,
High school graduate, Bachelor, and Doctorate. Occupation is at four levels, Administrative and
clerical, Sales, Professional or specialty, and Executive or managerial. A different number of
observations are in each level of education – occupation combination.

Question 1.1: State the null and the alternate hypothesis for conducting one‐way ANOVA for
both Education and Occupation individually.
Answer: Let the treatments for variable education be represented as E whole for occupation pe
represented as O
Dependent Variable (Salary) Hypothesis for Education Hypothesis for Occupation

Null Hypothesis (H0) 𝐻0E1=E2=E3 𝐻0O1=O2=O3=O4
Alternate Hypothesis(H1) H1E1≠E2≠E3 or the means H1O1≠O2≠O3≠O4 or the
are not equal for any of the means are not equal for at
two pairs least any 2 pairs
Table 1.1 One‐way Annova hypothesis Table

Where: Where:
O1= Mean of Data for Administrative and clerical
E1= Mean of Data for High school graduate
O2= Mean of Data for Sales
E2= Mean of Data for Bachelor
O3= Mean of Data for Professional or specialty
E3= Mean of Data for Doctorate
O4=Mean of Data for Executive or managerial
To conduct independent One‐way analysis for
the variables/treatments Education and occupation on the dependent variable Salary above
hypothesis must be considered independently as separate treatment while all other factors are
randomized.
Summary:
One Way Annova Education
Null Hypothesis 𝐻0: The mean salary is the same across all the 3 categories of education (High
School Graduate, Bachelors & Doctorate).
Alternate Hypothesis 𝐻1: The mean salary is different in at least one category of education.



One Way Annova Occupation:
Null Hypothesis 𝐻0: The mean salary is the same across all the 4 categories of occupation
(Administrative and clerical, Sales, Professional or specialty, and Executive or managerial).
Alternate Hypothesis 𝐻1: The mean salary is different in at least one category of occupation.
Question 1.2: Perform a one‐way ANOVA on Salary with respect to Education. State whether
the null hypothesis is accepted or rejected based on the ANOVA results.

Answer: Exploratory Data Analysis: Sample of Data Set & Checking the type of variables in Data
set Data Set:
The Data has (2) independent
variables Occupation and Education
while (1) dependent variable Salary

Type of Variable
Salary the dependent variable id of
integer type and represent the
observations while the treatments of
dependent variable of Education and
Occupation are object of String type
variable. Also, there is no missing
values.

Null Hypothesis 𝐻0: The mean salary is the same across all the 3 categories of education (High
School Graduate, Bachelors & Doctorate).
Alternate Hypothesis 𝐻1: The mean salary is different in at least one category of education.
Post application of One‐way Annova below results are obtained. Snippet for Output (Jupyter)
Fig 2


Since the p value = 1.257709e‐08 is less than the significance level (alpha = 0.05), we can reject
the null hypothesis and conclude that there is a significant difference in the mean salaries for at
least one category of education. What it means is that Education level does have an impact on
the salary and the variable is to eb considered as a factor in further analysis on what is the
impact.
Question 1.3: Perform a one‐way ANOVA on Salary with respect to Occupation. State whether
the null hypothesis is accepted or rejected based on the ANOVA results.
Answer: One Way Annova Occupation:
Null Hypothesis 𝐻0: The mean salary is the same across all the 4 categories of occupation
(Administrative and clerical, Sales, Professional or specialty, and Executive or managerial).
Alternate Hypothesis 𝐻1: The mean salary is different in at least one category of occupation
Post application of One‐way Annova below results are obtained. Snippet for Output (Jupyter)

Since the p value = 0.458508 is greater than the significance level (alpha = 0.05), we fail to
reject the null hypothesis (i.e., we accept H0) and conclude that there is no significant
difference in the mean salaries across the 4 categories of occupation. Based on the above
results we can conclude that Occupation does not have a significant affect on the salaries
provided in the sample data set.
Question 1.4: If the null hypothesis is rejected in either (2) or in (3), find out which class means
are significantly different. Interpret the result.
Answer:
We perform post‐hoc (Tukey HSD) analysis only if the ANOVA test shows a p‐value less than α.
Where p>α, we don’t know whether the means are all the same or not. Hence performing the
test only for Education where 1‐way Annova showed that the p value is less that Alpha.
The table shows that since the p‐ values (p‐adj in the table) are lesser than the significance level
for all the three categories of education, this implies that the mean salaries across all categories
of education are different.



Above conclusion is further solidified by performing Tukey HSD on Occupation as well where
the P values are greater than Alpha which concludes there is no significant difference between
means.

Problem 1B:


Question 1B.1 What is the interaction between two treatments? Analyze the effects of one
variable on the other (Education and Occupation) with the help of an interaction plot. [hint: use
the ‘point plot’ function from the ‘seaborn’ function]
Answer:
Interaction Plot:

Fig 1B.1

The interaction plot shows that there is significant amount of interaction between the
categorical variables, Education and Occupation.
The following are some of the observations from the interaction plot:

 People with HS‐grad education do not reach the position of Exec‐managerial and they
hold only Adm‐clerk, Sales and Prof‐Specialty occupations.
 Prof‐Specialty people with education as Doctorate earn maximum salaries and people
with education as HS‐Grad earn the minimum.
 People with education as HS ‐Grad earn the minimum salaries.
 There are no people with education as HS ‐grad who hold Exec‐managerial occupation
 People with education as Bachelors and occupation as Prof‐Specialty earn lesser than
people with education as Bachelors and occupations as Adm‐clerical and Sales.
 People with education as Bachelors and occupation Sales earn higher than people with
education as Bachelors and occupation Prof‐Specialty whereas people with education as
Doctorate and occupation Sales earn lesser than people with Doctorate and occupation
Prof‐Specialty. We see a reversal in this part of the plot.
 x whereas people with education as Doctorate and occupation as Prof‐Specialty earn
higher than people with education as Doctorate and occupation Exec‐Managerial.
 Salespeople with Bachelors or Doctorate education earn the same salaries and earn
higher than people with education as HS‐grad.
 Prof‐Specialty people with education as Doctorate earn maximum salaries and people
with education as HS‐Grad earn the minimum.

 People with education as HS ‐Grad earn the minimum salaries.
 There are no people with education as HS ‐grad who hold Exec‐managerial occupation
 People with education as Bachelors or Doctorate and occupation as Adm‐clerical and
Sales almost earn the same salaries (salaries ranging from 170000–190000).
 Adm clerical people with education as HS‐grad earn the lowest salaries when compared
to people with education as Bachelors or Doctorate.
 People with education as Bachelors and occupation, Sales and Exec‐Managerial earn the
same salaries.

Question 1B.2: Perform a two‐way ANOVA based on Salary with respect to both Education and
Occupation (along with their interaction Education*Occupation). State the null and alternative
hypotheses and state your results. How will you interpret this result?

Answer: Defining Hypothesis:
Ho=The effect of the independent variable ‘education’ on the mean ‘salary’ does not depend on
the effect of the other independent variable ‘occupation’
H1=There is an interaction effect between the independent variable ‘education’ and the
independent variable ‘occupation’ on the mean Salary.

Snippet from 2‐way Annova Analysis from Jupyter Notebook

Fig 7
Since the p value = 2.232500e‐05 is lesser than the significance level (alpha = 0.05), we can
reject the null hypothesis.
Hence, we can conclude that there is a significant amount of interaction between the variables,
Education and Occupation.

Question 1B.3: Explain the business implications of performing ANOVA for this case study.

Answer: From the ANOVA method and the interaction plot, we see that education combined
with occupation results in higher and better salaries among the people. It is clearly seen that
people with education as Doctorate draw the maximum salaries and people with education HS‐
grad earn the least. Thus, we can conclude that Salary is dependent on educational
qualifications and occupation.

Problem 2

The dataset Education ‐ Post 12th Standard.csv contains information on various colleges. You
are expected to do a Principal Component Analysis for this case study according to the
instructions given. The data dictionary of the 'Education ‐ Post 12th Standard.csv' can be found
in the following file: Data Dictionary.xlsx.

Question 2.1: Perform Exploratory Data Analysis [both univariate and multivariate analysis to
be performed]. What insight do you draw from the EDA?

Ans: Performing the EDA
Describing the data with help of Data Dictionary.

S.NO Data Columns
1 Names: Names of various university and colleges
2 Apps: Number of applications received
3 Accept: Number of applications accepted
4 Enroll: Number of new students enrolled
5 Top10perc: Percentage of new students from top 10% of Higher Secondary class
6 Top25perc: Percentage of new students from top 25% of Higher Secondary class
7 F.Undergrad: Number of full‐time undergraduate students
8 P.Undergrad: Number of part‐time undergraduate students
9 Outstate: Number of students for whom the particular college or university is Out‐
of‐state tuition
10 Room.Board: Cost of Room and board
11 Books: Estimated book costs for a student
12 Personal: Estimated personal spending for a student
13 PhD: Percentage of faculties with Ph.D.’s
14 Terminal: Percentage of faculties with terminal degree
15 S.F.Ratio: Student/faculty ratio
16 perc.alumni: Percentage of alumni who donate
17 Expend: The Instructional expenditure per student
18 Grad.Rate: Graduation rate


Sample of the dataset:

There are 777 unique colleges with 17 attributes/variables associated with ongoing new
admissions with 9 variables having an impact on the decision made by students to enroll in a
particular college or not.

Let us check the types of variables in the data frame.

There are total of 777 rows and 18 columns with Names as the only object type variable and
remaining being integer/floating vales. There are no missing values.


Checking the statistics of Data


Analyzing each variable:

APPS:
The data for variable apps clearly has outliers as evident from the Box plot while the histograms
further solidify the same as data seems to be right slewed. The number of applications received
by the colleagues greatly varies and this could be due to any of the remaining variables/factors
in the data frame has outliers. The minimum value being 81 with mean of ~3000 while the
maximum goes up to 50000

ACCEPT:
Majority of the applications accepted by the universities is between 100‐1500 mark where as
there are outliers to this.


ENROLL

The maximum frequency of enrollments per college seems to be somewhere between 25‐500
students as evident from the histogram however there are a good number of outlier to this
trend which could be due to facilities, lower fee, faculty competency/ ratio to students and
other factors.

Top10per & Top25perc:

There are no outliers in percentage of students applied/enrolled for the colleges that are from
Top 25% of higher secondary class while data of Top 105 is right/positively slewed.


Full Time Undergraduate & Part Time Undergraduate Students

The number of undergraduate students in both modes full time and part time is right slewed
with outliers amongst various colleges with maximum frequency distribute between 1000‐3000
students.

OUTSTATE:

The data is normally distributed with just 1 outlier highlighting that students apply/get
onboarded mostly in colleges within their own state.


ROOM & BOARD:

The cost of room and boarding is normally distributed with few outliers.

BOOKS:

The cost of the books varies greatly and there are outlies towards both quartiles. The data is
binomially distributed, and this variable could be one of the primary components that affects
the decision of students to apply in a particular college based on the expenditure to be incurred
on books.


PERSONAL EXPENDITURE

Personal expenditure is positively skewed with the expenses incurred by some students higher
than the others.

PhD Faculty

The data has outliers towards Q1, and data is negatively skewed with maximum frequency
distribution between 70‐85 faculty members. Clearly few colleges have lesser number of PhD
faculty that can be a determining factor towards popularity of the college amongst the
students.



TERMINAL Degree:

Shows similar properties as Phd. Data is negatively skewed with few outliers towards the first
quartile. The maximum frequency is distributed between 70‐90 faculty members having
Terminal level of degree in their respective fields.

Student to Faculty Ratio:

Data is normally distributed with outliers on either side there is a possibility where Student to
faculty ratio is low will have better an more focused education hence such colleges may be
preferred over others. This could be one of the important variables in further processing of the
given data set.



Percentage of Alumni Donated:

The data is negatively skewed with few outliers for some of the colleges. The data is normally
distributed with maximum spread between 10‐30 alumni donations. The variable seems to have
an insignificant impact on the overall analysis.

EXPEND:

The data has along tail towards the right which is also clear with the box plot output having
high number of outliers towards the right ow Q3. The instructional expenditure variations could
be related to the facilities in infrastructure or salary structure of the faculty members and can
be an indicator of the expertise of the faculty or additional infrastructure maintained by certain
institutes as compared to others.
Deeper analysis of the variables shows discrepancy in the Graduation rate levels where one of
the entries is marked as 118. The graduation rate cannot be more than 100% hence this is an
incorrect entry and will require an appropriate treatment.


GRAD RATE

This is an important indicator related to success of the students in particular college and can be
one of the deciding factors while initial selection of an institute for application submission of
final joining amongst the students.
On closer analysis the data somehow seems to have incorrect value as an outlier with Grad rate
of 118% which is mathematically incorrect and may require treatment for modelling.



MULTIVARIANT ANALYSIS:

HEAT MAP:


With help of multivariant analysis it is further proved that variables like PhD faculty and ones
having terminal level of degree have high correlation since that seems to be obvious growth
path in field of education.

Similarly, the number of applications had high and positive correlation between Applications
submitted, accepted, and subsequently enrolled indicating higher the number of applications
received higher is the acceptance and final enrollment numbers.

Question 2.2 Is scaling necessary for PCA in this case? Give justification and perform scaling.

Ans: Yes, scaling is required for this data because the scale/variations are on higher side for
each variable. The PCA calculates a new projection of data set. And the new axis is based on the
standard deviation of these variables. Since we have variable with a high standard deviation
this will have a higher weight for the calculation of axis than a variable with a low standard
deviation. If we normalize our data, all variables will have the same standard deviation, thus all
variables have the same weight and our PCA calculates relevant axis.

Applying scaling using the Zscore:

Before Z score:

After Z Score:



As evident from the above description of the data the standard deviation is now 1 and the
mean values are better centered as compared to data without scaling. This centers the data.

Question 2.3 Comment on the comparison between the covariance and the correlation
matrices from this data [on scaled data].

ANS: Covariance” indicates the direction of the linear relationship between variables.
“Correlation” on the other hand measures both the strength and direction of the linear
relationship between two variables. Correlation is a function of the covariance. What sets them
apart is the fact that correlation values are standardized whereas, covariance values are not.
You can obtain the correlation coefficient of two variables by dividing the covariance of these
variables by the product of the standard deviations of the same values. If we revisit the
definition of Standard Deviation, it essentially measures the absolute variability of a datasets’
distribution. When you divide the covariance values by the standard deviation, it essentially
scales the value down to a limited range of ‐1 to +1. This is precisely the range of the
correlation values.


Snippet from Correlation Matrix

The snippet shows that there is strong correlation between Applications submitted,
Applications accepted, Enrolled and number of full time Undergraduate which is logical.

Snippet from Covariance Matrix

Covariance” indicates the direction of the linear relationship between variables. Percentage of
Alumi donating is negative liner realationship with applicatpns, acceptace but has a positive
relationship with Top10% of higher secondayr schools idication that students from 10% schools
are the ones that show strong inclination towards donation.


Question 2.4 Check the dataset for outliers before and after scaling. What insight do you derive
here? [Please do not treat Outliers unless specifically asked to do so]

ANS:
Snipped before scaling

Snippet After Scaling:

As evident from the above snippets scaling has no impact on outliers because it merely changes
the scale of variables around the Z score so that each variable can enjoy same weightage while
doing further analysis or fitting into a model. For outliers one must employ outlier treatments
like using the Interquartile range.s

Question 2.5 Extract the eigenvalues and eigenvectors. [Using Sklearn PCA Print Both]

Ans: Eigen Vector:

array([[ 2.48765602e‐01, 2.07601502e‐01, 1.76303592e‐01,
3.54273947e‐01, 3.44001279e‐01, 1.54640962e‐01,
2.64425045e‐02, 2.94736419e‐01, 2.49030449e‐01,
6.47575181e‐02, ‐4.25285386e‐02, 3.18312875e‐01,
3.17056016e‐01, ‐1.76957895e‐01, 2.05082369e‐01,
3.18908750e‐01, 2.52315654e‐01],
[ 3.31598227e‐01, 3.72116750e‐01, 4.03724252e‐01,
‐8.24118211e‐02, ‐4.47786551e‐02, 4.17673774e‐01,
3.15087830e‐01, ‐2.49643522e‐01, ‐1.37808883e‐01,
5.63418434e‐02, 2.19929218e‐01, 5.83113174e‐02,
4.64294477e‐02, 2.46665277e‐01, ‐2.46595274e‐01,
‐1.31689865e‐01, ‐1.69240532e‐01],
[‐6.30921033e‐02, ‐1.01249056e‐01, ‐8.29855709e‐02,
3.50555339e‐02, ‐2.41479376e‐02, ‐6.13929764e‐02,
1.39681716e‐01, 4.65988731e‐02, 1.48967389e‐01,
6.77411649e‐01, 4.99721120e‐01, ‐1.27028371e‐01,
‐6.60375454e‐02, ‐2.89848401e‐01, ‐1.46989274e‐01,
2.26743985e‐01, ‐2.08064649e‐01],
[ 2.81310530e‐01, 2.67817346e‐01, 1.61826771e‐01,
‐5.15472524e‐02, ‐1.09766541e‐01, 1.00412335e‐01,
‐1.58558487e‐01, 1.31291364e‐01, 1.84995991e‐01,
8.70892205e‐02, ‐2.30710568e‐01, ‐5.34724832e‐01,
‐5.19443019e‐01, ‐1.61189487e‐01, 1.73142230e‐02,
7.92734946e‐02, 2.69129066e‐01],
[ 5.74140964e‐03, 5.57860920e‐02, ‐5.56936353e‐02,
‐3.95434345e‐01, ‐4.26533594e‐01, ‐4.34543659e‐02,
3.02385408e‐01, 2.22532003e‐01, 5.60919470e‐01,
‐1.27288825e‐01, ‐2.22311021e‐01, 1.40166326e‐01,
2.04719730e‐01, ‐7.93882496e‐02, ‐2.16297411e‐01,
7.59581203e‐02, ‐1.09267913e‐01],
[‐1.62374420e‐02, 7.53468452e‐03, ‐4.25579803e‐02,
‐5.26927980e‐02, 3.30915896e‐02, ‐4.34542349e‐02,
‐1.91198583e‐01, ‐3.00003910e‐02, 1.62755446e‐01,
6.41054950e‐01, ‐3.31398003e‐01, 9.12555212e‐02,
1.54927646e‐01, 4.87045875e‐01, ‐4.73400144e‐02,
‐2.98118619e‐01, 2.16163313e‐01],
[‐4.24863486e‐02, ‐1.29497196e‐02, ‐2.76928937e‐02,
‐1.61332069e‐01, ‐1.18485556e‐01, ‐2.50763629e‐02,
6.10423460e‐02, 1.08528966e‐01, 2.09744235e‐01,
‐1.49692034e‐01, 6.33790064e‐01, ‐1.09641298e‐03,

‐2.84770105e‐02, 2.19259358e‐01, 2.43321156e‐01,
‐2.26584481e‐01, 5.59943937e‐01],
[‐1.03090398e‐01, ‐5.62709623e‐02, 5.86623552e‐02,
‐1.22678028e‐01, ‐1.02491967e‐01, 7.88896442e‐02,
5.70783816e‐01, 9.84599754e‐03, ‐2.21453442e‐01,
2.13293009e‐01, ‐2.32660840e‐01, ‐7.70400002e‐02,
‐1.21613297e‐02, ‐8.36048735e‐02, 6.78523654e‐01,
‐5.41593771e‐02, ‐5.33553891e‐03],
[‐9.02270802e‐02, ‐1.77864814e‐01, ‐1.28560713e‐01,
3.41099863e‐01, 4.03711989e‐01, ‐5.94419181e‐02,
5.60672902e‐01, ‐4.57332880e‐03, 2.75022548e‐01,
‐1.33663353e‐01, ‐9.44688900e‐02, ‐1.85181525e‐01,
‐2.54938198e‐01, 2.74544380e‐01, ‐2.55334907e‐01,
‐4.91388809e‐02, 4.19043052e‐02],
[ 5.25098025e‐02, 4.11400844e‐02, 3.44879147e‐02,
6.40257785e‐02, 1.45492289e‐02, 2.08471834e‐02,
‐2.23105808e‐01, 1.86675363e‐01, 2.98324237e‐01,
‐8.20292186e‐02, 1.36027616e‐01, ‐1.23452200e‐01,
‐8.85784627e‐02, 4.72045249e‐01, 4.22999706e‐01,
1.32286331e‐01, ‐5.90271067e‐01],
[ 4.30462074e‐02, ‐5.84055850e‐02, ‐6.93988831e‐02,
‐8.10481404e‐03, ‐2.73128469e‐01, ‐8.11578181e‐02,
1.00693324e‐01, 1.43220673e‐01, ‐3.59321731e‐01,
3.19400370e‐02, ‐1.85784733e‐02, 4.03723253e‐02,
‐5.89734026e‐02, 4.45000727e‐01, ‐1.30727978e‐01,
6.92088870e‐01, 2.19839000e‐01],
[ 2.40709086e‐02, ‐1.45102446e‐01, 1.11431545e‐02,
3.85543001e‐02, ‐8.93515563e‐02, 5.61767721e‐02,
‐6.35360730e‐02, ‐8.23443779e‐01, 3.54559731e‐01,
‐2.81593679e‐02, ‐3.92640266e‐02, 2.32224316e‐02,
1.64850420e‐02, ‐1.10262122e‐02, 1.82660654e‐01,
3.25982295e‐01, 1.22106697e‐01],
[ 5.95830975e‐01, 2.92642398e‐01, ‐4.44638207e‐01,
1.02303616e‐03, 2.18838802e‐02, ‐5.23622267e‐01,
1.25997650e‐01, ‐1.41856014e‐01, ‐6.97485854e‐02,
1.14379958e‐02, 3.94547417e‐02, 1.27696382e‐01,
‐5.83134662e‐02, ‐1.77152700e‐02, 1.04088088e‐01,
‐9.37464497e‐02, ‐6.91969778e‐02],
[ 8.06328039e‐02, 3.34674281e‐02, ‐8.56967180e‐02,
‐1.07828189e‐01, 1.51742110e‐01, ‐5.63728817e‐02,
1.92857500e‐02, ‐3.40115407e‐02, ‐5.84289756e‐02,
‐6.68494643e‐02, 2.75286207e‐02, ‐6.91126145e‐01,
6.71008607e‐01, 4.13740967e‐02, ‐2.71542091e‐02,
7.31225166e‐02, 3.64767385e‐02],

[ 1.33405806e‐01, ‐1.45497511e‐01, 2.95896092e‐02,
6.97722522e‐01, ‐6.17274818e‐01, 9.91640992e‐03,
2.09515982e‐02, 3.83544794e‐02, 3.40197083e‐03,
‐9.43887925e‐03, ‐3.09001353e‐03, ‐1.12055599e‐01,
1.58909651e‐01, ‐2.08991284e‐02, ‐8.41789410e‐03,
‐2.27742017e‐01, ‐3.39433604e‐03],
[ 4.59139498e‐01, ‐5.18568789e‐01, ‐4.04318439e‐01,
‐1.48738723e‐01, 5.18683400e‐02, 5.60363054e‐01,
‐5.27313042e‐02, 1.01594830e‐01, ‐2.59293381e‐02,
2.88282896e‐03, ‐1.28904022e‐02, 2.98075465e‐02,
‐2.70759809e‐02, ‐2.12476294e‐02, 3.33406243e‐03,
‐4.38803230e‐02, ‐5.00844705e‐03],
[ 3.58970400e‐01, ‐5.43427250e‐01, 6.09651110e‐01,
‐1.44986329e‐01, 8.03478445e‐02, ‐4.14705279e‐01,
9.01788964e‐03, 5.08995918e‐02, 1.14639620e‐03,
7.72631963e‐04, ‐1.11433396e‐03, 1.38133366e‐02,
6.20932749e‐03, ‐2.22215182e‐03, ‐1.91869743e‐02,
‐3.53098218e‐02, ‐1.30710024e‐02]])

Eigenvalues:

array([5.45052162, 4.48360686, 1.17466761, 1.00820573, 0.93423123,
0.84849117, 0.6057878 , 0.58787222, 0.53061262, 0.4043029 ,
0.31344588, 0.22061096, 0.16779415, 0.1439785 , 0.08802464,
0.03672545, 0.02302787])


Question 2.6 Perform PCA and export the data of the Principal Component (eigenvectors) into a
data frame with the original features

Ans: PCA is performed and exported into data frame post which clearly multi collinearity is
reduced.



Question 2.7 Write down the explicit form of the first PC (in terms of the eigenvectors. Use
values with two places of decimals only). [hint: write the linear equation of PC in terms of
eigenvectors and corresponding features]

Ans

Question 2.8 Consider the cumulative values of the eigenvalues. How does it help you to decide
on the optimum number of principal components? What do the eigenvectors indicate?

ANS: Cumulative Values helps us to understand how much each carriable contributes towards
the principal components hence helps us to decide optimum number of principal components.

Question 2.9 Explain the business implication of using the Principal Component Analysis for this
case study. How may PCs help in the further analysis? [Hint: Write Interpretations of the
Principal Components Obtained]

ANS: Reduces the dimensionality by dropping few principal components while none of the
variable is dropped. With reduced multi collinearity models can be improved.


Dimensionality Reduction:
 The First PC explains 32% of variance
 The First (2) PCs combined contributes to 58% variance
 Similarly, by adding the first 6 component we can easily see that >80% variance can be
explained.
 Hence remaining PCs can be dropped reducing the components from 17 to 6

Improving Signal to Noise ratio
It helps to reduce the noise of minimize the data in mathematical space of concentration data
on the axis for better results from ML models. Below is the covariance matrix post PCA
application indicating that data/noise in mathematical space has been reduced with data now
being concentrated only around the axis of the Principal Components.


Question 2.10: Explain the business implication of using the Principal Component Analysis for
this case study. How may PCs help in the further analysis?

ANS: This business case study is about education dataset which contain the names of various
colleges, which has various details of colleges and university. To understand more about the
dataset, we perform univariate analysis and multivariate analysis which gives us the
understanding about the variables. From analysis we can understand the distribution of the
dataset, skew, and patterns in the dataset. From multivariate analysis we can understand the
correlation of variables. Inference of multivariate analysis shows we can understand multiple
variables highly correlated with each other. The scaling helps the dataset to standardize the
variable in one scale. Outliers are imputed using IQR values once the values are imputed we can
perform PCA. The principal component analysis is used reduce the multicollinearity between
the variables. Depending on the variance of the dataset we can reduce the PCA components.
The PCA components for this business case is 5 where we could understand the maximum
variance of the dataset. Using the components we can now understand the reduced
multicollinearity in the dataset


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Project: Advanced Statistics

Dependent Variable (Salary) Hypothesis for Education Hypothesis for Occupation

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