Time series

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Methods
of estimating
Master subtitle
trendstyle

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Semi Average Method :-

Under this method the time series that is being studied

into two equal parts. Then the values of each part are
summed up and averaged. The average of each part is
centered in the time period or the part from which it has
been calculated.
Example: Calculate the trend values by method of semiavges:
YEAR
1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

PRODU50
CTION

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36

43

45

41

39

42

41

34

39

Sol: - Let us take two periods of 5 years each 1976 to 1980 and
1981 to 1985.

YEAR

PRODUCTION SUB
[In million
TOTAL
tones]

1976

50

-2

43+(-0.8X-2)=44.6

1977

36

-1

43+(-0.8X-1)=43.8

1978

43

43+(-0.8X0)=43.0

1979

45

43+(-0.8X1)=42.2

1980

41

43+(-0.8X2)=41.4

1981

39

43+(-0.8X3)=40.6

1982

42

43+(-0.8X4)=39.8

1983
1984

41
34

5
6

43+(-0.8X5)=39.0
43+(-0.8X6)=38.2

1985

39

43+(-0.8X7)=37.4

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215

195

SEMI
AVG

43

39

TIME DEVIATION TREND VALUES

FROM THE
ORIGIN

The equation of the trend is Y=a+bx

a= 2S1/n

=2x215/10=43

b=4(S2-S1)/n2

=4(195-215) = -80/100 = -0.8

2) The method of moving avg:If m is odd number, the moving avg are easily
obtained. If m is an even number then centering procedure is
followed.
year
Population
(in millions)

E.g.:1. Compute 3 yearly412

moving avges for the following
2001
time series.
2002

438

2003

446

2004

454

2005

470

2006

483

2007
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490

Sol:- Here m is odd number i.e. 3.

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year

Population 3yearly
(in millions) moving
total

3yearly
moving
Avges

2001

412

2002

438

1296

1296/3=432

2003

446

1338

1338/3=446

2004

454

1370

1370/3=456.
66

2005

470

1407

1407/3=469

2006

483

1443

1443/3=481

2007

490

e.g:-2. Compute 4 yearly moving avges for

the following
year
Value
1998

103

1999

104

2000

107

2001

101

2002

102

2003

104

2004

105

2005

99

2006

100

Sol:- Here m is even i.e. 4. Here we have to follow the centering

procedure.

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Year

Value

4yearly
moving
total

1998

103

1999

104

2yearly
4yearly
moving
moving avg
Total of
i.e. 2m=2x4
4yearly
moving total

415
2000

107

829

829/8=103.62
5

828

103.5

414
2001

101
414

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2002

102

826

103.25

822

102.75

818

102.25

412
2003

104
410

2004

105
408

2005

99

2006

100

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3) Method of least squares:-

i) Straight line method:-

In this method the relation of

the type y=a+bx is fitted to the time
series.
The constants a and b obtained by
applying the following formula.

a=y/n

b = xy/x2

e.g.:- Fit a straight line trend to the

data
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year

Production

1992

77

1994

81

1996

88

1998

94

2000

94

2002

96

2004

98

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Sol:Y=a+bx be the trend equation.

N=7 an odd number. Therefore
middlemost point of time is taken as
0 year Producti X
X2
xy
Trend
1992

on
77

-3

-231

values
79.12

1993

81

-2

-162

82.65

1994

88

-1

-88

86.18

1995

94

89.71

1996

94

94

93.24

1997

96

192

96.77

1998

98

294

100.30

y=628
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x2=28 xy=99

Here n=7

a =628/7 =89.71

b =99/28 =3.535

y=a+bx

=89.71+3.535x
The trend values are obtained by
substituting different values of x
e.g. 2 if it is even

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year

Value

2002

10

2003

2004

12

2005

2006

11

2007

12

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Sol:- here n= 6 an even number.

Therefore 2 middlemost time points
are taken as x=-1 and x=1
year

Value

X2

Xy

2002

10

-5

25

-50

Trend
values
9.18

2003

-3

-24

9.64

2004

12

-1

-12

10.1

2005

10.56

2006

11

33

11.02

2007

12

25

60

11.48

x2=70

xy=16

y=62
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a =62/6 =10.33

b =16/70 =0.23

y=a+bx

=10.33+0.23x
Trend values are obtained by
substituting the different values of x

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