What is regression analysis in financial management and what are its characteristics?

The regression analysis method in financial management is to establish the regression function expression (called regression equation) between dependent variables and independent variables by using mathematical statistics method on the basis of mastering a large number of observation data. In regression analysis, when the causal relationship only involves the dependent variable and an independent variable, it is called unary regression analysis; When the causal relationship studied involves dependent variables and two or more independent variables, it is called multiple regression analysis. In addition, regression analysis is divided into linear regression analysis and nonlinear regression analysis according to whether the functional expression describing the causal relationship between independent variables and dependent variables is linear or nonlinear. Linear regression analysis is usually the most basic analysis method, and nonlinear regression problems can be transformed into linear regression problems by mathematical means.

Advantages of regression analysis in financial management;

1, regression analysis method is simpler and more convenient in analyzing multi-factor models;

2. Using regression model, as long as the model and data are the same, the results can only be calculated by standard statistical methods. However, in the form of charts, the interpretation of the relationship between data often varies from person to person, and the fitting curves drawn by different analysts are likely to be different.

3. Regression analysis can accurately measure the degree of correlation and regression fitting between various factors, and improve the effect of prediction equation; In regression analysis, because the actual situation that a variable is only affected by a single factor is rare, we should pay attention to the scope of application of the model, so when applying univariate regression analysis, there is indeed a variable that has a significantly higher influence on the dependent variable than other factors. Multiple regression analysis method is more suitable for practical economic problems and is used when it is influenced by many factors.

Application:

The correlation between social and economic phenomena is often difficult to be described by deterministic functional relationships, and most of them are random, and laws can only be found through statistical observation. Regression analysis is an important method to describe the correlation between random variables by using statistical principles.

In the calculation of logistics, the formula of regression analysis is as follows:

y=a+bx

b =∑xy-n∑x∑y/[∑x & amp； Sup2-n (∑x) and amp sup2];

a=∑y-b ∑x/n