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    TOD 212 - Digging Through Data - PPT - For Students - Monsoon 2023 (Autosaved)

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    The document discusses different techniques for data classification including k-nearest neighbors and discriminant analysis. K-nearest neighbors classifies new data based on the categories of the k closest existing data points, while discriminant analysis uses a regression model to compute discriminant scores that classify observations into predefined categories based on a cutoff value. Both techniques aim to organize data into meaningful groups based on shared characteristics in order to gain insights from large datasets.

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    TOD 212 - Digging Through Data - PPT - For Students - Monsoon 2023 (Autosaved)

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    The document discusses different techniques for data classification including k-nearest neighbors and discriminant analysis. K-nearest neighbors classifies new data based on the categories of the k closest existing data points, while discriminant analysis uses a regression model to compute discriminant scores that classify observations into predefined categories based on a cutoff value. Both techniques aim to organize data into meaningful groups based on shared characteristics in order to gain insights from large datasets.

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    The document discusses different techniques for data classification including k-nearest neighbors and discriminant analysis. K-nearest neighbors classifies new data based on the categories of the k closest existing data points, while discriminant analysis uses a regression model to compute discriminant scores that classify observations into predefined categories based on a cutoff value. Both techniques aim to organize data into meaningful groups based on shared characteristics in order to gain insights from large datasets.

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    5 views18 pages

    TOD 212 - Digging Through Data - PPT - For Students - Monsoon 2023 (Autosaved)

    Uploaded by

    dhyani.s
    The document discusses different techniques for data classification including k-nearest neighbors and discriminant analysis. K-nearest neighbors classifies new data based on the categories of the k closest existing data points, while discriminant analysis uses a regression model to compute discriminant scores that classify observations into predefined categories based on a cutoff value. Both techniques aim to organize data into meaningful groups based on shared characteristics in order to gain insights from large datasets.

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    of 18

    Ahmedabad University

    Monsoon 2023
    TOD212- Decision Sciences

    Digging through Data


    Digging through Data
    Data Classification
    Data classification is the process of separating and organizing data into
    relevant groups (“classes”) based on their shared characteristics.

    For example, classification models can be used to determine whether a


    customer is likely to purchase more items or not. If the classification model
    predicts a greater likelihood that they are about to make more purchases,
    then you might want to send them promotional offers and discounts
    accordingly.
    Data Mining
    Knowledge
    Discovery
    in Data (KDD)

    Data mining in general terms means mining or digging deep into data that is in
    different forms to gain patterns, and to gain knowledge on that pattern.

    In the process of data mining, large data sets are first sorted, then patterns are
    identified and relationships are established to perform data analysis and solve
    problems.
    What is Data Mining?
    • Data mining is an automatic or semi-automatic technical process
    that analyses large amounts of scattered information to make sense of it
    and turn it into knowledge.

    • It looks for anomalies, patterns, or correlations among millions of records to


    predict results.

    • Information continues to grow and grow. In this context, data mining is a


    strategic practice considered important by almost 80% of organizations.

    • With the joint action of analytics and data mining, which combines statistics,
    artificial Intelligence, and automatic learning, companies can create models
    to discover connections between millions of records.
    Some Common approaches in Data Mining
    • Cluster Analysis

    • Classification

    • Association

    • Cause-and-effect modeling
    Some Common
    approaches in
    Data Mining
    • Understanding –
    Group related documents
    for browsing, group
    genes and proteins that
    have similar functionality,
    or group stocks with
    similar price fluctuations

    • Summarization –
    Reduce the size of large
    data set
    Classification:
    • Classification methods seek to classify a categorical outcome
    into two or more categories based on various data attributes.
    • For each record in a database, we have a categorical
    variable of interest and several additional predictor
    variables.
    • For a given set of predictor variables, we would like to assign
    the best value of the categorical variable.
    Classification Techniques:
    • Two different data mining approaches used for classification:

    • k-nearest neighbors • Discriminant analysis


    • K-NN algorithm assumes the similarity
    between the new case/data and available • Uses predefined classes
    cases and puts the new case into the based on a set of linear
    category that is most similar to the available discriminant functions of the
    categories. predictor variables
    • K-NN algorithm stores all the available data
    and classifies a new data point based on
    the similarity. When new data appears, it
    can be easily classified into a well-suited
    category using the K-NN algorithm.
    k-nearest neighbors
    • k-NN algorithm
    • Finds records in a database
    with similar numerical values of
    a set of predictor variables.

    • The k-nearest neighbors (k-NN)


    algorithm is a classification
    scheme that attempts to find
    records in a database similar
    to the one we wish to classify.
    Suppose there are two categories, i.e., Category A and Category B,
    • The Similarity is based on the and we have a new data point x1, so that this data point will lie in
    “closeness” of a record to which of these categories.
    numerical predictors in the
    other records, using To solve this type of problem, we need a K-NN algorithm. With the help
    normalized Euclidean distances. of K-NN, we can quickly identify the category or class of a particular
    dataset.
    •Firstly, we will
    choose the number
    of neighbors, so we
    will choose the k=5.
    •Next, we will
    calculate
    the Euclidean
    distance between
    the data points. The
    Euclidean distance is
    the distance between
    two points, which we
    have already studied
    in geometry. It can
    be calculated as:

    By calculating the Euclidean distance we got the nearest neighbors, as three


    nearest neighbors in category A and two nearest neighbors in category B.
    How does K-NN work?
    The K-NN working can be explained on the basis of the below algorithm:
    Step-1: Select the number K of the neighbors
    Step-2: Calculate the Euclidean distance of K number of neighbors
    Step-3: Take the K nearest neighbors as per the calculated Euclidean distance.
    Step-4: Among these k neighbors, count the number of the data points in each
    category.
    Step-5: Assign the new data points to that category for which the number of
    the neighbor is maximum.
    Step-6: Our model is ready.
    k-Nearest Neighbor Rules
    • The nearest neighbor to a record is the one that has the smallest distance from it.
    – If 𝑘 = 1, then the 1-N N rule classifies a record in the same category as its
    nearest neighbor.
    – k-NN rule finds the k-Nearest Neighbors to each record we want to classify and
    then assigns the classification as the classification of most of the k nearest
    neighbors.

    • Typically, various values of k are used, and then results are inspected to determine
    which is best.
    • There is no particular way to determine the best value for "𝑘", so we need to try
    some values to find the best out of them. The most preferred value for 𝑘 is 5.
    • A meager value for 𝑘, such as k = 1 or k = 2, can be noisy and lead to the effects
    of outliers in the model.
    • Large values for 𝑘 are good, but they may find some difficulties.
    Using k-NN for Classifying Credit-Approval Decisions
    • Credit Approval Decisions Classification Data
    • Consider the first new record, 51. If k = 1, the record having the minimum
    distance from record 51 is record 27. Since the credit decision was to
    approve, we would classify record 51 as an approval.
    Discriminant Analysis
    • Discriminant analysis is another classification method.
    • It is a technique for classifying a set of observations into predefined
    classes.
    • The purpose is to determine the class of an observation based on a set
    of predictor variables.

    • e.g. classifying applications for loans, credit cards, and insurance into
    low- and high-risk categories
    • With only two classification groups, we can apply regression
    analysis. Unfortunately, when there are more than two, linear
    regression cannot be applied, and special software must be used.
    Classifying Credit Decisions Using Discriminant Analysis
    • For the credit-approval data, model the decision (approve or reject) as a function of
    the other variables. Use the following regression model, where Y represents the
    decision (0 or 1):

    • 𝑌 = 𝑏0 + 𝑏1 × Homeowner)+(𝑏2 × Credit Score)+(𝑏3 × 𝑌𝑒𝑎𝑟𝑠 𝑜𝑓 𝐶𝑟𝑒𝑑𝑖𝑡 𝐻𝑜𝑠𝑡𝑜𝑟𝑦 +


    𝑏4 × 𝑅𝑒𝑣𝑜𝑙𝑣𝑖𝑛𝑔 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 + (𝑏5 × 𝑅𝑒𝑣𝑜𝑙𝑣𝑖𝑛𝑔 𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛)
    • The estimated value of the decision variable is called a discriminant score.
    Discriminant Analysis

    • The estimated regression function is


    • 𝑌 = 0.567 + (0.149 × Homeowner)+(0.000465 × Credit Score)+(0.00420 ×
    Discriminant Analysis
    Rule for classifying observations using the discriminant scores:
    • Compute a cut-off value so that if a discriminant score is less than or
    equal to it, the observation is assigned to one group; otherwise, it is
    assigned to the other group.
    • One simple way is to use the midpoint of the average discriminant
    scores:
    • Cut-Off Value = (0.9083 + 0.0781)/2 = 0.4932

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