Probability And Statistics

Simple Linear Regression

Name: Syed Hamza Ibrar Gillani

Roll No:Fa-2019-BSSE-060
Introduction:
what is Regression?

Regression is a statistical method is used in Finance, investing and other

disciplines that attempt to determine the strength and character of the
relationship between one Dependent Variable and a series of other
Independent Variable.
 Dependent Variable:
Whose values depend on other variable are known as dependent variable.
 Independent Variable:
Variable who forms the basis of estimation is called Independent variable.
Example:

Income (Independent variable) Expenditure(Dependent Variable)

50k 40k

55k 42k

75k 50k

81k ? > estimate/predict value

What is meant by Simple Linear Regression?

Simple Linear Regression is a regression model that estimates the relationship

between one independent variable and one dependent variable using straight
line.
 Both variables should be quantitative.

Model for Simple linear Regression:

 General /Regression Equation.
 Fitted Model.
 Regression Equation:
Yi=α+βx +E
 Yi Depend Variable
α Intercept (is the value of dependent variable when independent is
zero)
β Regression Co-efficient/slope(tells the value of change in
dependent variable with the unit charge in independent variable.
x Independent Variable
E Error Term
 Fitted Model:
Ŷ=a + bx

Ŷ Estimated Value of Y
Parameter Statistics
a Intercept
population Sample
b Regression-Coefficient
x Independent Variable
Formulae to Find a& b value.
 For a :- For b:-

1. a =∑y -b ∑x 1. b= n ∑x.y- ∑x ∑y
n n∑x2- (∑X)2
2. a = Ý – bx
2. b= ∑xy- nx y
∑x2- (∑X)2
Questions?
Solution: