7 Types of Statistical Analysis

Statistics is the branch of science that renders various tools and analytical
techniques in order to deal with the huge extent of data, in simple terms, it is
the science of assembling, classifying, analyzing and interpreting &
manifesting the numeric form of data for making inferences about the
population, from the picked out sample data that can be used by business
experts to solve their problems.
 
Therefore, in the efforts to organize data and anticipates future trends,
depending upon the information, many organizations heavily rely on statistical
analysis.
 
More precisely, statistical data analysis concerns data collection,
interpretation and presentation. It can be approached while handling data to
solve complex problems. More precisely, the statistical analysis delivers
significance to insignificant/irrelevant data or numbers. 

The Key types of Statistical Analysis are

 
In particular, statistical analysis is the process of consolidating and analyzing
distinct samples of data to divulge patterns or trends and anticipating future
events/situations to make appropriate decisions. 
 
The statistical analysis has the following types that considerably depends
upon data types. 

1. Descriptive Statistical Analysis

 
Fundamentally, it deals with organizing and summarizing data using numbers
and graphs. It makes easy the massive quantities of data for intelligible
interpretation even without forming conclusions beyond the analysis or
responding to any hypotheses. 
 
Instead of processing data in its raw form, descriptive statistical analysis
enables us to represent and interpret data more efficiently through numerical
calculation, graphs or tables.
 
From all necessary preparatory steps to concluding analysis and
interpretation, descriptive statistical analysis involves various processes such
as tabulation, a measure of central tendency (mean, median, mode), a
measure of dispersion or variance (range, variation, standard deviation),
skewness measurements and time-series analysis.

Formula chart, source

Under descriptive analysis, the data is summarized in tabular form and

managed & presented in the forms of charts and graphs for summing up data,
assuming it for the whole population. 
2. Inferential Statistical Analysis
 
The inferential statistical analysis basically is used when the inspection of
each unit from the population is not achievable, hence, it extrapolates, the
information obtained, to the complete population. 
 
In simple words, inferential statistical analysis lets us test a hypothesis
depending on a sample data from which we can extract inferences by
applying probabilities and make generalizations about the whole data, and
also can make conclusions with respect to future outcomes beyond the data
available.
 
By this way, it is highly preferable while drawing conclusions and making
decisions about the whole population on the basis of sample data. As such,
this method involves the sampling theory, various tests of significance,
statistical control etc.

Descriptive vs Inferential Statistical Analysis

3. Predictive Analysis
 
Predictive analysis is implemented to make a prediction of future events, or what is
likely to take place next, based on current and past facts and figures. 
 
In simple terms, predictive analytics uses statistical techniques and machine learning
algorithms to describe the possibility of future outcomes, behaviour, and trends
depending on recent and previous data. Widely used techniques under predictive
analysis include data mining, data modelling, artificial intelligence, machine learning and
etc. to make imperative predictions. 
 
In the current business system, this analysis is approached by marketing
companies, insurance organizations, online service providers, data-driven
marketing, and financial corporations, however, any business can take
advantage of it by planning for an unpredictable future, such as to gain the
competitive advantage and narrow down the risk connected with an
unpredictable future event.
 
The predictive analysis converges on forecasting upcoming events using data
and ascertaining the likelihood of several trends in data behaviour. Therefore,
businesses use this approach to get the answer “what might happen?” where
the basis of making predictions is a probability measure.
 
 
4. Prescriptive Analysis
 
The prescriptive analysis examines the data In order to find out what should
be done, it is widely used in business analysis for identifying the best possible
action for a situation. 
 
While other statistical analysis might be deployed for driving exclusions, it
provides the actual answer. Basically, it focuses on discovering the optimal
suggestion for a process of decision making.
  
Several techniques, implemented under prescriptive analysis are simulation,
graph analysis, algorithms, complex event processing, machine
learning, recommendation engine, business rules, etc.
  
However, it is nearly related to descriptive and predictive analysis, where
descriptive analysis explains data in terms of what has happened, predictive
analysis anticipates what could happen, and here prescriptive analysis deals
in providing appropriate suggestions among the available preferences.

 
5. Exploratory Data Analysis (EDA)
 
Exploratory data analysis, or EDA as it is known, is a counterpart of inferential
statistics, and greatly implemented by data experts. It is generally the first step
of the data analysis process that is conducted prior to any other statistical
analysis techniques.
 
EDA is not deployed alone for predicting or generalizing, it renders a preview
of data and assists in getting some key insights into it. 
 
This method fully focuses on analyzing patterns in the data to recognize
potential relationships. EDA can be approached for discovering unknown
associations within data, inspecting missing data from collected data and
obtaining maximum insights, examining assumptions and hypotheses. 

 
6. Causal Analysis
 
In general, causal analysis assists in understanding and determining the
reasons behind “why” things occur, or why things are as such, as they
appear. 
 
For example, in the present business environment, many ideas, or businesses
are there that get failed due to some events’ happening, in that condition, the
causal analysis identifies the root cause of failures, or simply the basic reason
why something could happen. 
 
In the IT industry, this is used to check the quality assurance of particular
software, like why that software failed, if there was a bug, a data breach, etc,
and prevents companies from major setbacks.  
 
We can consider the causal analysis when;

 Identifying significant problem-areas inside the data,

 Examining and identifying the root causes of the problem, or failure, 
 Understanding what will be happening to a provided variable if one another variable
changes.
 
 
7. Mechanistic Analysis
 
Among the above statistical analysis, mechanistic is the least common type,
however, it is worthy in the process of big data analytics and biological
science. It is deployed to understand and explain how things happen rather
than how specific things will take place ulteriorly.
 
It uses the clear concept of understanding individual changes in variables that
cause changes in other variables correspondingly while excluding external
influences and considering the assumption that the entire system gets
influenced via its own internal elements’ interaction.
 
The fundamental objectives of mechanistic analysis involve;
  Understanding the definite changes in that could make changes in other variables
 A clear explanation of the happening of a past event in the context of data, especially
when the particular subject/concern deals with specific activities.
 
For example, in biological science, when studying and inspecting how various
parts of the virus are affected by making changes in medicine. 
 
Besides the above statistical analysis types, it is worth discussing here that
these statistical treatments, or statistical data analysis techniques, profoundly
rely on the way, the data is being used. While counting on the function and
requirement of a particular study, data and statistical analysis can be
employed for many purposes, for example, medical scientists can use a
variety of statistical analysis for testing the drug effectiveness, or potency.
 
What’s more, plenty of available data can inform numerous things, data
professionalists want to explore, therefore statistical analysis is able to get
some informative outcomes and make some inferences. Also, in some cases,
statistical analysis can be approached to accumulate information regarding
the preference of people and their habits. 
 
For example, user data, at sites like Facebook and Instagram, can be used by
analysts for understanding user perception, like what uses are doing and what
motivates them. This information can benefit commercial ads where a
particular group of users are targeted to sell them things. It is also helpful for
the application developers to understand users’ response and habits and
make changes in products accordingly.

Statistical analysis process

There are five major steps involved in the statistical analysis process:

1. Data collection
The first step in statistical analysis is data collection. You can collect data through
primary or secondary sources such as surveys, customer relationship management
software, online quizzes, financial reports and marketing automation tools. To ensure
the data is viable, you can choose data from a sample that's representative of a
population. For example, a company might collect data from previous customers to
understand buyer behaviors.

2. Data organization
The next step after data collection is data organization. Also known as data cleaning,
this stage involves identifying and removing duplicate data and inconsistencies that may
prevent you from getting an accurate analysis. This step is important because it can
help companies ensure their data and the conclusions they draw from the analysis are
correct.

3. Data presentation
Data presentation is an extension of data cleaning, as it involves arranging the data for
easy analysis. Here, you can use descriptive statistics tools to summarize the data.
Data presentation can also help you determine the best way to present the data based
on its arrangement.

4. Data analysis
Data analysis involves manipulating data sets to identify patterns, trends and
relationships using statistical techniques, such as inferential and associational statistical
analysis. You can use computer software like spreadsheets to automate this process
and reduce the likelihood of human error in the statistical analysis process. This can
allow you to analyze data efficiently.

5. Data interpretation
The last step is data interpretation, which provides conclusive results regarding the
purpose of the analysis. After analysis, you can present the result as charts, reports,
scorecards and dashboards to make it accessible to nonprofessionals. For example, the
interpretation of the analysis of the impact of a 6,000-worker factory on crime rate in a
small town with a population of 13,000 residents can show a declining rate of criminal
activities. You may use a line graph to display this decline.

4 common statistical analysis methods

Here are four common methods for performing statistical analysis:

Mean
You can calculate the mean, or average, by finding the sum of a list of numbers and then
dividing the answer by the number of items in the list. It is the simplest form of statistical
analysis, allowing the user to determine the central point of a data set. The formula for
calculating mean is:

Mean = Set of numbers / Number of items in the set

Example: You can find the mean of the numbers 1, 2, 3, 4, 5 and 6 by first adding the numbers
together, then dividing the answer from the first step by the number of figures in the list, which is
six. The mean of the numbers is 3.5.

Standard deviation
Standard deviation (SD) is used to determine the dispersion of data points. It is a statistical
analysis method that helps determine how the data spreads around the mean. A high standard
deviation means the data disperses widely from the mean. A low standard deviation shows that
most of the data are closer to the mean.
An application of SD is to test whether participants in a survey gave similar questions. If a large
percentage of respondents' answers are similar, it means you have a low standard deviation
and you can apply their responses to a larger population. To calculate standard deviation, use
this formula:

Example:

You can calculate the standard deviation of the data set used in the mean calculation. The first
step is to find the variance of the data set. To find variance, subtract each value in the data set
from the mean, square the answer, add everything together and divide by the number of data
points.

Regression

Regression is a statistical technique used to find a relationship between a dependent variable

and an independent variable. It helps track how changes in one variable affect changes in
another or the effect of one on the other. Regression can show whether the relationship
between two variables is weak, strong or varies over a time interval. The regression formula is:

Y = a + b(x)
Y represents the independent variable, or the data used to predict the dependent variable
x represents the dependent variable which is the variable you want to measure
a represents the y-intercept or the value of y when x equals zero
b represents the slope of the regression graph
Example: Find the dollar cost of maintaining a car driven for 40,000 miles if the cost of
maintenance when there is no mileage on the car is $100. Take b as 0.02, so the cost of
maintenance increases by $0.02 for every unit increase in miles driven.

Y = cost of maintaining the car

X = 40,000 miles
a = $100
b = $0.02
Y = $100 + 0.02(40,000)

Y = $900

This shows that mileage affects the maintenance costs of a car.

Hypothesis testing
Hypothesis testing is used to test if a conclusion is valid for a specific data set by comparing the
data against a certain assumption. The result of the test can nullify the hypothesis, where it is
called the null hypothesis or hypothesis 0. Anything that violates the null hypothesis is called the
first hypothesis or hypothesis 1.

Example: From the regression calculation above, you want to test the hypothesis that mileage
affects the maintenance costs of a car. To test the hypothesis, you claim mileage affects the
maintenance costs of a car. Here, we reject the null hypothesis since the regression above
shows that mileage influences car maintenance costs.