AE 9 – Statistical Analysis with Software Application

Lecture 4: Measure of Shape

Skewness
- It is a statistical measure that assesses the asymmetry of a probability distribution. It quantifies
the extent to which the data is skewed or shifted to one side.
- Refers to the direction and the magnitude of the lack of symmetry among the given set of data.
A set of data can have same mean and standard deviation but may be different in their
appearances.
The figure on the left shows two sets of data with same mean
and standard deviation (𝑥̅ = 15, s = 5). The distribution on the left
are symmetrical, while the distribution on the right is
asymmentrical.
Two types of skewness:
1. Symmetric Distribution (Normal Distribution). The spread
of the frequencies is the same on both sides of the center point
of the curve. This happens when Mean = Median = Mode.
2. Asymmetric Distribution. A distribution which is not
symmetrical. Either positively or negatively skewed.
a. Positively skewed. Indicates a longer tail on the right side of the distribution. This
happens when the median is greater than the mode but less than the mean.
b. Negatively skewed. Indicates a longer tail on the left side of the distribution. This
happens when the median is greater than the mean but less than the mode.

Formula for Skewness:

̅) 𝟑
∑(𝒙 − 𝒙
𝑺𝒌𝒆𝒘𝒏𝒆𝒔𝒔 =
(𝒏 − 𝟏)𝒔𝟑
Rule of thumb:
1. For skewness values between -0.5 and 0.5, the data exhibit approximate symmetry.
2. Skewness values within the range of -1 and -0.5 (negatively skewed) or 0.5 and 1 (positively
skewed) indicate slightly skewed data distributions.
3. Data with skewness values less than -1 or greater than 1 are considered highly skewed.
Kurtosis
- It is a statistical measure that quantifies the shape of a probability distribution. It provides
information about the tails and peakedness of the distribution compared to a normal
distribution.
- The measure refers to the tailedness of a distribution. Tailedness refers how often the outliers
occur.
- Peakness refers to the degree to which data values are concentrated around the mean.
- In finance, kurtosis is used as a measure of a
financial risk.
Types of Excess Kurtosis
1. Leptokurtic – heavy-tailed distribution.
2. Mesokurtic – kurtosis same as the normal
distribution.
3. Platykurtic – short-tailed distribution.
Formula for Kurtosis:
̅) 𝟒
∑(𝒙 − 𝒙
𝑲𝒖𝒓𝒕𝒐𝒔𝒊𝒔 =
(𝒏 − 𝟏)𝒔𝟒