Statistical analysis is a scientific tool that helps collect and analyze large amounts of data to identify common patterns and trends to convert them into meaningful information. In simple words, statistical analysis is a data analysis tool that helps draw meaningful conclusions from raw and unstructured data.
The conclusions are drawn using statistical analysis facilitating decision-making and helping businesses make future predictions on the basis of past trends. It can be defined as a science of collecting and analyzing data to identify trends and patterns and presenting them. Statistical analysis involves working with numbers and is used by businesses and other institutions to make use of data to derive meaningful information.
Types of Statistical Analysis
Given below are the 6 types of statistical analysis:
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Descriptive Analysis
Descriptive statistical analysis involves collecting, interpreting, analyzing, and summarizing data to present them in the form of charts, graphs, and tables. Rather than drawing conclusions, it simply makes the complex data easy to read and understand.
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Inferential Analysis
The inferential statistical analysis focuses on drawing meaningful conclusions on the basis of the data analyzed. It studies the relationship between different variables or makes predictions for the whole population.
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Predictive Analysis
Predictive statistical analysis is a type of statistical analysis that analyzes data to derive past trends and predict future events on the basis of them. It uses machine learning algorithms, data mining, data modelling, and artificial intelligence to conduct the statistical analysis of data.
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Prescriptive Analysis
The prescriptive analysis conducts the analysis of data and prescribes the best course of action based on the results. It is a type of statistical analysis that helps you make an informed decision.
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Exploratory Data Analysis
Exploratory analysis is similar to inferential analysis, but the difference is that it involves exploring the unknown data associations. It analyzes the potential relationships within the data.
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Causal Analysis
The causal statistical analysis focuses on determining the cause and effect relationship between different variables within the raw data. In simple words, it determines why something happens and its effect on other variables. This methodology can be used by businesses to determine the reason for failure.
Benefits of Statistical Analysis
Statistical analysis can be called a boon to mankind and has many benefits for both individuals and organizations. Given below are some of the reasons why you should consider investing in statistical analysis:
- It can help you determine the monthly, quarterly, yearly figures of sales profits, and costs making it easier to make your decisions.
- It can help you make informed and correct decisions.
- It can help you identify the problem or cause of the failure and make corrections. For example, it can identify the reason for an increase in total costs and help you cut the wasteful expenses.
- It can help you conduct market analysis and make an effective marketing and sales strategy.
- It helps improve the efficiency of different processes.
Statistical Analysis Process
Given below are the 5 steps to conduct a statistical analysis that you should follow:
- Step 1: Identify and describe the nature of the data that you are supposed to analyze.
- Step 2: The next step is to establish a relation between the data analyzed and the sample population to which the data belongs.
- Step 3: The third step is to create a model that clearly presents and summarizes the relationship between the population and the data.
- Step 4: Prove if the model is valid or not.
- Step 5: Use predictive analysis to predict future trends and events likely to happen.
Statistical Analysis Methods
Although there are various methods used to perform data analysis, given below are the 5 most used and popular methods of statistical analysis:
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Mean
Mean or average mean is one of the most popular methods of statistical analysis. Mean determines the overall trend of the data and is very simple to calculate. Mean is calculated by summing the numbers in the data set together and then dividing it by the number of data points. Despite the ease of calculation and its benefits, it is not advisable to resort to mean as the only statistical indicator as it can result in inaccurate decision making.
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Standard Deviation
Standard deviation is another very widely used statistical tool or method. It analyzes the deviation of different data points from the mean of the entire data set. It determines how data of the data set is spread around the mean. You can use it to decide whether the research outcomes can be generalized or not.
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Regression
Regression is a statistical tool that helps determine the cause and effect relationship between the variables. It determines the relationship between a dependent and an independent variable. It is generally used to predict future trends and events.
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Hypothesis Testing
Hypothesis testing can be used to test the validity or trueness of a conclusion or argument against a data set. The hypothesis is an assumption made at the beginning of the research and can hold or be false based on the analysis results.
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Sample Size Determination
Sample size determination or data sampling is a technique used to derive a sample from the entire population, which is representative of the population. This method is used when the size of the population is very large. You can choose from among the various data sampling techniques such as snowball sampling, convenience sampling, and random sampling.
Statistical Analysis Software
Everyone can't perform very complex statistical calculations with accuracy making statistical analysis a time-consuming and costly process. Statistical software has become a very important tool for companies to perform their data analysis. The software uses Artificial Intelligence and Machine Learning to perform complex calculations, identify trends and patterns, and create charts, graphs, and tables accurately within minutes.
Statistical Analysis Examples
Look at the standard deviation sample calculation given below to understand more about statistical analysis.
The weights of 5 pizza bases in cms are as follows:
Particulars (Weight in cms) |
Mean Deviation |
Square of Mean Deviation |
|
9 |
9-6.4 = 2.6 |
(2.6)2 = 6.76 |
|
2 |
2-6.4 = - 4.4 |
(-4.4)2 = 19.36 |
|
5 |
5-6.4 = - 1.4 |
(-1.4)2 = 1.96 |
|
4 |
4-6.4 = - 2.4 |
(-2.4)2 = 5.76 |
|
12 |
12-6.4 = 5.6 |
(5.6)2 = 31.36 |
Calculation of Mean = (9+2+5+4+12)/5 = 32/5 = 6.4
Calculation of mean of squared mean deviation = (6.76+19.36+1.96+5.76+31.36)/5 = 13.04
Sample Variance = 13.04
Standard deviation = √13.04 = 3.611
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