8/6/2021 K-means Cluster Analysis · UC Business Analytics R Programming Guide

UC Business Analytics R Programming Guide

K-means Cluster Analysis

Clustering is a broad set of
techniques for finding
subgroups of observations
within a data set. When we
cluster observations, we
want observations in the
same group to be similar and observations in different
groups to be dissimilar. Because there isn’t a response
variable, this is an unsupervised method, which implies
that it seeks to find relationships between the n
observations without being trained by a response variable.
Clustering allows us to identify which observations are
alike, and potentially categorize them therein. K-means
clustering is the simplest and the most commonly used
clustering method for splitting a dataset into a set of k
groups.

tl;dr
This tutorial serves as an introduction to the k-means
clustering method.

1. Replication Requirements: What you’ll need to

reproduce the analysis in this tutorial
2. Data Preparation: Preparing our data for cluster
analysis
3. Clustering Distance Measures: Understanding how
to measure differences in observations
4. K-Means Clustering: Calculations and methods for
creating K subgroups of the data
5. Determining Optimal Clusters: Identifying the right
number of clusters to group your data

Replication Requirements
To replicate this tutorial’s analysis you will need to load
the following packages:

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library(tidyverse) # data manipulation

library(cluster) # clustering algorithms

library(factoextra) # clustering algorithms & visual

Data Preparation
To perform a cluster analysis in R, generally, the data
should be prepared as follows:

1. Rows are observations (individuals) and columns are

variables
2. Any missing value in the data must be removed or
estimated.
3. The data must be standardized (i.e., scaled) to make
variables comparable. Recall that, standardization
consists of transforming the variables such that they
have mean zero and standard deviation one.1

Here, we’ll use the built-in R data set USArrests , which

contains statistics in arrests per 100,000 residents for
assault, murder, and rape in each of the 50 US states in
1973. It includes also the percent of the population living
in urban areas

df <- USArrests

To remove any missing value that might be present in the

data, type this:

df <- na.omit(df)

As we don’t want the clustering algorithm to depend to an

arbitrary variable unit, we start by scaling/standardizing
the data using the R function scale :

df <- scale(df)

head(df)

## Murder Assault UrbanPop

## Alabama 1.24256408 0.7828393 -0.5209066 -0.003
## Alaska 0.50786248 1.1068225 -1.2117642 2.4842
## Arizona 0.07163341 1.4788032 0.9989801 1.042
## Arkansas 0.23234938 0.2308680 -1.0735927 -0.184
## California 0.27826823 1.2628144 1.7589234 2.067
## Colorado 0.02571456 0.3988593 0.8608085 1.864

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Clustering Distance Measures

The classification of observations into groups requires
some methods for computing the distance or the
(dis)similarity between each pair of observations. The
result of this computation is known as a dissimilarity or
distance matrix. There are many methods to calculate this
distance information; the choice of distance measures is a
critical step in clustering. It defines how the similarity of
two elements (x, y) is calculated and it will influence the
shape of the clusters.

The choice of distance measures is a critical step in

clustering. It defines how the similarity of two elements
(x, y) is calculated and it will influence the shape of the
clusters. The classical methods for distance measures are
Euclidean and Manhattan distances, which are defined as
follow:

Euclidean distance:

 n


2
deuc (x, y) = ∑ (xi − yi ) (1)
⎷
i=1

Manhattan distance:
n

dman (x, y) = ∑ |(xi − yi )| (2)

i=1

Where, x and y are two vectors of length n.

Other dissimilarity measures exist such as correlation-

based distances, which is widely used for gene expression
data analyses. Correlation-based distance is defined by
subtracting the correlation coefficient from 1. Different
types of correlation methods can be used such as:

Pearson correlation distance:

n
∑ (xi − x̄)(yi − ȳ )
i=1
dcor (x, y) = 1 − (3)
n n
2 2
√∑ (xi − x̄) ∑ (yi − ȳ )
i=1 i=1

Spearman correlation distance:

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The spearman correlation method computes the

correlation between the rank of x and the rank of y
variables.
n ′ ′ ′ ′
∑ (x − x̄ )(y − ȳ )
i=1 i i
dspear (x, y) = 1 − (4)
n ′ ′ n ′ ′
2 2
√∑ (x − x̄ ) ∑ (y − ȳ )
i=1 i i=1 i

Where x ′
i
= rank(xi ) and y ′
i
= rank(yi ) .

Kendall correlation distance:

Kendall correlation method measures the correspondence

between the ranking of x and y variables. The total
number of possible pairings of x with y observations is n(n
− 1)/2, where n is the size of x and y. Begin by ordering the
pairs by the x values. If x and y are correlated, then they
would have the same relative rank orders. Now,
for each y i

, count the number of y j > yi (concordant pairs (c)) and

the number of y j < yi (discordant pairs (d)).

Kendall correlation distance is defined as follow:

nc − nd
dkend (x, y) = 1 − (5)
1
n(n − 1)
2

The choice of distance measures is very important, as it

has a strong influence on the clustering results. For most
common clustering software, the default distance measure
is the Euclidean distance. However, depending on the type
of the data and the research questions, other dissimilarity
measures might be preferred and you should be aware of
the options.

Within R it is simple to compute and visualize the

distance matrix using the functions get_dist and
fviz_dist from the factoextra R package. This starts
to illustrate which states have large dissimilarities (red)
versus those that appear to be fairly similar (teal).

get_dist : for computing a distance matrix

between the rows of a data matrix. The default
distance computed is the Euclidean; however,
get_dist also supports distanced described in
equations 2-5 above plus others.
fviz_dist : for visualizing a distance matrix

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distance <- get_dist(df)

fviz_dist(distance, gradient = list(low = "#00AFBB",

K-Means Clustering
K-means clustering is the most commonly used
unsupervised machine learning algorithm for partitioning
a given data set into a set of k groups (i.e. k clusters),
where k represents the number of groups pre-specified by
the analyst. It classifies objects in multiple groups (i.e.,
clusters), such that objects within the same cluster are as
similar as possible (i.e., high intra-class similarity),
whereas objects from different clusters are as dissimilar as
possible (i.e., low inter-class similarity). In k-means
clustering, each cluster is represented by its center (i.e,
centroid) which corresponds to the mean of points
assigned to the cluster.

The Basic Idea

The basic idea behind k-means clustering consists of
defining clusters so that the total intra-cluster variation
(known as total within-cluster variation) is minimized.
There are several k-means algorithms available. The
standard algorithm is the
Hartigan-Wong algorithm
(1979), which defines the total within-cluster variation as
the sum of squared distances Euclidean distances between
items and the corresponding centroid:

2
W (Ck ) = ∑ (xi − μk ) (6)

xi ∈Ck

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where:

xi is a data point belonging to the cluster C k

μk is the mean value of the points assigned to the

cluster C k

Each observation (x ) is assigned to a given cluster such

i

that the sum of squares (SS) distance of the observation to

their assigned cluster centers (μ ) is minimized.
k

We define the total within-cluster variation as follows:

k k

2
tot. withiness = ∑ W (Ck ) = ∑ ∑ (xi − μk ) (7)

k=1 k=1 xi ∈Ck

The total within-cluster sum of square measures the

compactness (i.e goodness) of the clustering and we want
it to be as small as possible.

K-means Algorithm
The first step when using k-means clustering is to indicate
the number of clusters (k) that will be generated in the
final solution. The algorithm starts by randomly selecting
k objects from the data set to serve as the initial centers
for the clusters. The selected objects are also known as
cluster means or centroids. Next, each of the remaining
objects is assigned to it’s closest centroid, where closest is
defined using the Euclidean distance (Eq. 1) between the
object and the cluster
mean. This step is called “cluster
assignment step”. After the assignment step, the
algorithm computes the new mean value of each cluster.
The term cluster “centroid update” is used to design this
step. Now that the centers have been recalculated, every
observation is checked again to see if it might be closer to
a different cluster. All the objects are reassigned again
using the updated cluster means. The cluster assignment
and centroid update steps are iteratively repeated until
the
cluster assignments stop changing (i.e until
convergence is achieved). That is, the clusters formed in
the current iteration are the same as those obtained in the
previous iteration.

K-means algorithm can be summarized as follows:

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1. Specify the number of clusters (K) to be created (by

the analyst)
2. Select randomly k objects from the data set as the
initial cluster centers or means
3. Assigns each observation to their closest centroid,
based on the Euclidean distance between the object
and the centroid
4. For each of the k clusters update the cluster centroid
by calculating the new mean values of all the data
points in the cluster. The centroid of a Kth cluster is
a vector of length p containing the means of all
variables for the observations
in the kth cluster; p is
the number of variables.
5. Iteratively minimize the total within sum of square
(Eq. 7). That is, iterate steps 3 and 4 until the cluster
assignments stop changing or the maximum number
of iterations is reached. By default, the R software
uses 10 as the default value
for the maximum
number of iterations.

Computing k-means clustering in R

We can compute k-means in R with the kmeans function.
Here will group the data into two clusters ( centers =
2 ). The kmeans function also has an nstart option
that attempts multiple initial configurations and reports
on the best one. For example, adding nstart = 25 will
generate 25 initial configurations. This approach is often
recommended.

k2 <- kmeans(df, centers = 2, nstart = 25)

str(k2)

## List of 9

## $ cluster : Named int [1:50] 1 1 1 2 1 1 2 2

## ..- attr(*, "names")= chr [1:50] "Alabama" "Ala
## $ centers : num [1:2, 1:4] 1.005 -0.67 1.014
## ..- attr(*, "dimnames")=List of 2

## .. ..$ : chr [1:2] "1" "2"

## .. ..$ : chr [1:4] "Murder" "Assault" "UrbanPop

## $ totss : num 196

## $ withinss : num [1:2] 46.7 56.1

## $ tot.withinss: num 103

## $ betweenss : num 93.1

## $ size : int [1:2] 20 30

## $ iter : int 1

## $ ifault : int 0

## - attr(*, "class")= chr "kmeans"

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The output of kmeans is a list with several bits of

information. The most important being:

cluster : A vector of integers (from 1:k) indicating

the cluster to which each point is allocated.
centers : A matrix of cluster centers.
totss : The total sum of squares.
withinss : Vector of within-cluster sum of squares,
one component per cluster.
tot.withinss : Total within-cluster sum of
squares, i.e. sum(withinss).
betweenss : The between-cluster sum of squares,
i.e. $totss-tot.withinss$.
size : The number of points in each cluster.

If we print the results we’ll see that our groupings resulted

in 2 cluster sizes of 30 and 20. We see the cluster centers
(means) for the two groups across the four variables
(Murder, Assault, UrbanPop, Rape). We also get the cluster
assignment for each observation (i.e. Alabama was
assigned to cluster 2, Arkansas was assigned to cluster 1,
etc.).

k2

## K-means clustering with 2 clusters of sizes 20, 3

##

## Cluster means:

## Murder Assault UrbanPop Rape

## 1 1.004934 1.0138274 0.1975853 0.8469650

## 2 -0.669956 -0.6758849 -0.1317235 -0.5646433

##

## Clustering vector:

## Alabama Alaska Arizona

## 1 1 1
## Colorado Connecticut Delaware
## 1 2 2
## Hawaii Idaho Illinois
## 2 2 1
## Kansas Kentucky Louisiana
## 2 2 1
## Massachusetts Michigan Minnesota M
## 2 1 2
## Montana Nebraska Nevada New
## 2 2 1
## New Mexico New York North Carolina Nor
## 1 1 1
## Oklahoma Oregon Pennsylvania Rho
## 2 2 2
## South Dakota Tennessee Texas
## 2 1 1
## Virginia Washington West Virginia
## 2 2 2
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##

## Within cluster sum of squares by cluster:

## [1] 46.74796 56.11445

## (between_SS / total_SS = 47.5 %)

##

## Available components:

##

## [1] "cluster" "centers" "totss"

## [5] "tot.withinss" "betweenss" "size"
## [9] "ifault"

We can also view our results by using fviz_cluster .

This provides a nice illustration of the clusters. If there
are more than two dimensions (variables) fviz_cluster
will perform principal component analysis (PCA) and plot
the data points according to the first two principal
components that explain the majority of the variance.

fviz_cluster(k2, data = df)

Alternatively, you can use standard pairwise scatter plots

to illustrate the clusters compared to the original
variables.

df %>%

as_tibble() %>%

mutate(cluster = k2$cluster,

state = row.names(USArrests)) %>%

ggplot(aes(UrbanPop, Murder, color = factor(cluster

geom_text()

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Because the number of clusters (k) must be set before we

start the algorithm, it is often advantageous to use several
different values of k and examine the differences in the
results. We can execute the same process for 3, 4, and 5
clusters, and the results are shown in the figure:

k3 <- kmeans(df, centers = 3, nstart = 25)

k4 <- kmeans(df, centers = 4, nstart = 25)

k5 <- kmeans(df, centers = 5, nstart = 25)

# plots to compare

p1 <- fviz_cluster(k2, geom = "point", data = df) + g

p2 <- fviz_cluster(k3, geom = "point", data = df) +
p3 <- fviz_cluster(k4, geom = "point", data = df) +
p4 <- fviz_cluster(k5, geom = "point", data = df) +

library(gridExtra)

grid.arrange(p1, p2, p3, p4, nrow = 2)

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Although this visual assessment tells us where true

dilineations occur (or do not occur such as clusters 2 & 4
in the k = 5 graph) between clusters, it does not tell us
what the optimal number of clusters is.

Determining Optimal Clusters

As you may recall the analyst specifies the number of
clusters to use; preferably the analyst would like to use
the optimal number of clusters. To aid the analyst, the
following explains the three most popular methods for
determining the optimal clusters, which includes:

1. Elbow method
2. Silhouette method
3. Gap statistic

Elbow Method
Recall that, the basic idea behind cluster partitioning
methods, such as k-means clustering, is to define clusters
such that the total intra-cluster variation (known as total
within-cluster variation or total within-cluster sum of
square) is minimized:

minimize( ∑ W (Ck )) (8)

k=1

where C is the k cluster and W (C ) is the within-

k
th
k

cluster variation. The total within-cluster sum of square

(wss) measures the compactness of the clustering and we
want it to be as small as possible. Thus, we can use the
following algorithm to define the optimal clusters:

1. Compute clustering algorithm (e.g., k-means

clustering) for different values of k. For instance, by
varying k from 1 to 10 clusters
2. For each k, calculate the total within-cluster sum of
square (wss)
3. Plot the curve of wss according to the number of
clusters k.
4. The location of a bend (knee) in the plot is generally
considered as an indicator of the appropriate
number of clusters.

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We can implement this in R with the following code. The

results suggest that 4 is the optimal number of clusters as
it appears to be the bend in the knee (or elbow).

set.seed(123)

# function to compute total within-cluster sum of squ

wss <- function(k) {

kmeans(df, k, nstart = 10 )$tot.withinss

# Compute and plot wss for k = 1 to k = 15

k.values <- 1:15

# extract wss for 2-15 clusters

wss_values <- map_dbl(k.values, wss)

plot(k.values, wss_values,

type="b", pch = 19, frame = FALSE,

xlab="Number of clusters K",

ylab="Total within-clusters sum of squares")

Fortunately, this process to compute the “Elbow method”

has been wrapped up in a single function
( fviz_nbclust ):

set.seed(123)

fviz_nbclust(df, kmeans, method = "wss")

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Average Silhouette Method

In short, the average silhouette approach measures the
quality of a clustering. That is, it determines how well
each object lies within its cluster. A high average
silhouette width indicates a good clustering. The average
silhouette method computes the average silhouette of
observations for different values of k. The optimal number
of clusters k is the one that maximizes the average
silhouette over a range of possible values for k.2

We can use the silhouette function in the cluster

package to compuate the average silhouette width. The
following code computes this approach for 1-15 clusters.
The results show that 2 clusters maximize the average
silhouette values with 4 clusters coming in as second
optimal number of clusters.

# function to compute average silhouette for k cluste

avg_sil <- function(k) {

km.res <- kmeans(df, centers = k, nstart = 25)

ss <- silhouette(km.res$cluster, dist(df))

mean(ss[, 3])

# Compute and plot wss for k = 2 to k = 15

k.values <- 2:15

# extract avg silhouette for 2-15 clusters

avg_sil_values <- map_dbl(k.values, avg_sil)

plot(k.values, avg_sil_values,

type = "b", pch = 19, frame = FALSE,

xlab = "Number of clusters K",

ylab = "Average Silhouettes")

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Similar to the elbow method, this process to compute the

“average silhoutte method” has been wrapped up in a
single function ( fviz_nbclust ):

fviz_nbclust(df, kmeans, method = "silhouette")

Gap Statistic Method

The gap statistic has been published by R. Tibshirani, G.
Walther, and T. Hastie (Standford University, 2001). The
approach can be applied to any clustering method (i.e. K-
means clustering, hierarchical clustering). The gap
statistic compares the total intracluster variation for
different values of k with their expected values under null
reference distribution of the data (i.e. a distribution with
no obvious clustering). The reference dataset is generated
using Monte Carlo simulations of the sampling process.
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That is, for each variable (x ) in the data set we compute

i

its range [min(x i ), max(xj )] and generate values for the

n points uniformly from the interval min to max.

For the observed data and the the reference data, the total
intracluster variation is computed using different values
of k. The gap statistic for a given k is defined as follow:
∗
Gapn (k) = En log(Wk ) − log(Wk ) (9)

Where E denotes the expectation under a sample size n

∗
n

from the reference distribution. E is defined via ∗

n

bootstrapping (B) by generating B copies of the reference

datasets and, by computing the average log(W ∗
k
) . The gap
statistic measures the deviation of the observed W value k

from its expected value under the null hypothesis. The

estimate of the optimal clusters (k
^
) will be the value that
maximizes Gap (k). This means that the clustering
n

structure is far away from the uniform distribution of

points.

In short, the algorithm involves the following steps:

1. Cluster the observed data, varying the number of

clusters from k = 1, … , k , and compute the
max

corresponding W . k

2. Generate B reference data sets and cluster each of

them with varying number of clusters
k = 1, … , k . Compute the estimated gap
max

statistics presented in eq. 9.

3. Let w̄ = (1/B) ∑ log(W ), compute the standard
b
∗

kb

deviation sd(k) = √(1/b) ∑ (log(W

b
∗

kb
) − w̄)
2

and define s k = sdk × √1 + 1/B .

4. Choose the number of clusters as the smallest k such
that Gap(k) ≥ Gap(k + 1) − s . k+1

To compute the gap statistic method we can use the

clusGap function which provides the gap statistic and
standard error for an output.

# compute gap statistic

set.seed(123)

gap_stat <- clusGap(df, FUN = kmeans, nstart = 25,

K.max = 10, B = 50)

# Print the result

print(gap_stat, method = "firstmax")

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## Clustering Gap statistic ["clusGap"] from call:

## clusGap(x = df, FUNcluster = kmeans, K.max = 10, B

## B=50 simulated reference sets, k = 1..10; spaceH0=
## --> Number of clusters (method 'firstmax'): 4

## logW E.logW gap SE.sim

## [1,] 3.458369 3.638250 0.1798804 0.03653200

## [2,] 3.135112 3.371452 0.2363409 0.03394132

## [3,] 2.977727 3.235385 0.2576588 0.03635372

## [4,] 2.826221 3.120441 0.2942199 0.03615597

## [5,] 2.738868 3.020288 0.2814197 0.03950085

## [6,] 2.669860 2.933533 0.2636730 0.03957994

## [7,] 2.598748 2.855759 0.2570109 0.03809451

## [8,] 2.531626 2.784000 0.2523744 0.03869283

## [9,] 2.468162 2.716498 0.2483355 0.03971815

## [10,] 2.394884 2.652241 0.2573567 0.04104674

We can visualize the results with fviz_gap_stat which

suggests four clusters as the optimal number of clusters.

fviz_gap_stat(gap_stat)

In addition to these commonly used approaches, the

NbClust package, published by Charrad et al., 2014,
provides 30 indices for determining the relevant number
of clusters and proposes to users the best clustering
scheme from the different results obtained by varying all
combinations of number of clusters, distance measures,
and clustering methods.

Extracting Results
With most of these approaches suggesting 4 as the
number of optimal clusters, we can perform the final

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analysis and extract the results using 4 clusters.

# Compute k-means clustering with k = 4

set.seed(123)

final <- kmeans(df, 4, nstart = 25)

print(final)

## K-means clustering with 4 clusters of sizes 13, 1

##

## Cluster means:

## Murder Assault UrbanPop Rape

## 1 -0.9615407 -1.1066010 -0.9301069 -0.96676331

## 2 -0.4894375 -0.3826001 0.5758298 -0.26165379

## 3 0.6950701 1.0394414 0.7226370 1.27693964

## 4 1.4118898 0.8743346 -0.8145211 0.01927104

##

## Clustering vector:

## Alabama Alaska Arizona

## 4 3 3
## Colorado Connecticut Delaware
## 3 2 2
## Hawaii Idaho Illinois
## 2 1 3
## Kansas Kentucky Louisiana
## 2 1 4
## Massachusetts Michigan Minnesota M
## 2 3 1
## Montana Nebraska Nevada New
## 1 1 3
## New Mexico New York North Carolina Nor
## 3 3 4
## Oklahoma Oregon Pennsylvania Rho
## 2 2 2
## South Dakota Tennessee Texas
## 1 4 3
## Virginia Washington West Virginia
## 2 2 1
##

## Within cluster sum of squares by cluster:

## [1] 11.952463 16.212213 19.922437 8.316061

## (between_SS / total_SS = 71.2 %)

##

## Available components:

##

## [1] "cluster" "centers" "totss"

## [5] "tot.withinss" "betweenss" "size"
## [9] "ifault"

We can visualize the results using fviz_cluster :

fviz_cluster(final, data = df)

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And we can extract the clusters and add to our initial data
to do some descriptive statistics at the cluster level:

USArrests %>%

mutate(Cluster = final$cluster) %>%

group_by(Cluster) %>%

summarise_all("mean")

## # A tibble: 4 × 5

## Cluster Murder Assault UrbanPop Rape

## <int> <dbl> <dbl> <dbl> <dbl>

## 1 1 3.60000 78.53846 52.07692 12.17692

## 2 2 5.65625 138.87500 73.87500 18.78125

## 3 3 10.81538 257.38462 76.00000 33.19231

## 4 4 13.93750 243.62500 53.75000 21.41250

Additional Comments
K-means clustering is a very simple and fast algorithm.
Furthermore, it can efficiently deal with very large data
sets. However, there are some weaknesses of the k-means
approach.

One potential disadvantage of K-means clustering is that

it requires us to pre-specify the number of clusters.
Hierarchical clustering is an alternative approach which
does not require that we commit to a particular choice of
clusters. Hierarchical clustering has an added advantage
over K-means clustering in that it results in an attractive
tree-based representation of the observations, called a
dendrogram. A future tutorial will illustrate the
hierarchical clustering approach.

An additional disadvantage of K-means is that it’s

sensitive to outliers and different results can occur if you
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change the ordering of your data. The Partitioning Around

Medoids (PAM) clustering approach is less sensititive to
outliers and provides a robust alternative to k-means to
deal with these situations. A future tutorial will illustrate
the PAM clustering approach.

For now, you can learn more about clustering methods

with:

An Introduction to Statistical Learning

Applied Predictive Modeling
Elements of Statistical Learning
A Practical Guide to Cluster Analysis in R

1. Standardization makes the four distance measure methods -

Euclidean, Manhattan, Correlation and Eisen - more similar than they
would be with non-transformed data. ↩

2. Kaufman and Rousseeuw, 1990 ↩

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