While all the numerous advanced tools and techniques are employed for data analysis such as ML, IoT etc, one of the techniques frequently preferred for analyzing such data is statistical Time Series Analysis.
We all must have heard that people are saying that the price of different objects has decreased or increased with time, these different objects could be anything like petrol, diesel, gold, silver, edible things, etc.
Another example is, the rate of interest fluctuates in banks and different for different kinds of loans. What are all this data, how useful it is? These types of data are time-series data that go through analysis for forecasts.
Because of the tremendous variety of conditions, time-series analysis is used by both nature and human beings for communication, description, and data visualizations.
Also, time is the physical quantity, and elements, coefficients, parameters, and characteristics of time-series data are mathematical quantities, so time-series can have real-time or real-world interpretations as well.
What is Time-Series Analysis?
Examples of Time-Series Analysis
Implementing Time-series Analysis in ML
ML Models and Methods in Time-Series Analysis
In the broad form, an analysis is conducted to obtain inference what has occurred in the past with the data point series and endeavour to predict what is going to appear in the coming time.
An ordered set of observations with respect to time periods is a time series. In simple words, a sequential organization of data accordingly to their time of occurrence is termed as time series.
For example, "how do people get to know that the price of an object as increased or decreased over time", they do so by comparing the price of an object over a set of the time period.
A time series data is the set of measurements taking place in a constant interval of time, here time acts as independent variable and the objective ( to study changes in a characteristics) is dependent variables.
For example, one can measure
Consumption of energy per hour
Sales on daily basis
Company's profits per quarter
Annual changes in a population of a country.
The time series data is of three types:
Time series data: A set of observations contains values, taken by variable at different times.
Cross-sectional data: Data values of one or more variables, gathered at the same time-point.
Pooled data: A combination of time series data and cross-sectional data.
A time-series data can be represented using various data visualization techniques in order to uncover the hidden patterns in datasets, such as shown below in the image.
Time-Series Analysis through various mode of data visualization
Since time acts as a reference point in relation to the entire procedure, it can be noticed that time-series always depicts a relationship between two variables in which one is time and the other one is any quantitative variable.
Moreover, it is not necessarily there is an increment in the change of variable with respect to time in the observations, it also exhibited decrement in variable-time observational data.
For example, the temperature of a particular area at a particular time increases or decreases accordingly.
"Time series analysis is a statistical technique dealing in time series data, or trend analysis."
A time-series contains sequential data points mapped at a certain successive time duration, it incorporates the methods that attempt to surmise a time series in terms of understanding either the underlying concept of the data points in the time series or suggesting or making predictions.
Consider an example of a restaurant in which prediction is made on the number of customers as when will more customers appear in the restaurant at a specified time duration based on the previous appearance of customers with time.
We can use Time Series for multiple investigations to predict future as circadian rhythms, seasonal behaviours, trends, changes, etc. to interrogate the questions like predicted values, what is leading and lagging behind, connections and association, control, repetitions, and hidden pattern, etc.
Time series analysis is basically the recording of data at a regular interval of time, which could lead to taking a versed decision, crucial for trade and so have multiple applications such as Stock Market and Trends Analysis, Financial Analysis and forecasting, Inventory analysis, Census Analysis, Yield prediction, Sales forecasting, etc.
Multiple applications of the Time-Series Analysis
Broadly specified time-series models are Autoregressive (AR), Integrated (I), Moving Average(MA), and some other models are the combination of these models such as Autoregressive Moving Average (ARMA), and Autoregressive Integrated Moving Average (ARIMA) models.
These models reflect measurements near concurrently in time will be more closely relevant as compared to measurements distant apart.
Consider an example In the financial domain, the main objective is to recognize trends, seasonal behaviour, and correlation through the usage of time series analysis technique and producing filters based on the forecasts, this includes;
To predict expected utilities- For the perfect and successively trading, it is necessary to have accurate and reliable future predictions such as asset prices, variation in usage, products in demand in statistical form through market research, and time-series dataset.
Simulate series- After getting statistical output data of financial time series, that can be used for creating simulations of future events. It helps us to determine the count of trades, expected trading costs and returns, required financial and technical investment, several risks in trading, etc.
Presume relationship- Recognition of the relationship between the time series and other quantities gives us trading signs to improve the existing fashion of trading. For example, to know the spreading of foreign exchange pair and its variation with a proposal, estimated trades can be inferred for a certain period for forecasting a widespread to reduce transaction costs.
Moreover, consider the simple example of a train steadiness, it includes the Time Series Data model that can be implemented to represent information such as stopping trains. It can be used;
To aggregate over time which train is late at which location, and
How many passengers were there on the train?
Furthermore, in order to examine social media hashtags and how frequently a hashtag is utilized in a specified interval of time. More and more, how many responses this particular hashtag used during such an interval. (Source)
A table below shows the particular field to analyze using time-series data and what possible instance could be investigated through it,
Gross Domestic Product (GDP), Consumer Price Index (CPI), and unemployment rates
Birth rates, population, migration data, political indicators
Disease rates, mortality rates, mosquito populations
Blood pressure tracking, weight tracking, cholesterol measurements, heart rate monitoring
Global temperatures, monthly sunspot observations, pollution levels.
It is a well-known fact that Machine Learning is a powerful technique in imagining, speech and natural language processing for a huge explicated dataset available. On the other hand,
Among various defined applications, discussing here Time series forecasting, it is an important area of machine learning because there are multiple problems involving time components for making predictions. There are multiple models and methods used as approaches for time series forecasting, let’s understand them more clearly;
In the Univariate Time-series Forecasting method, forecasting problems contain only two variables in which one is time and the other is the field we are looking to forecast.
On the other hand, in the Multivariate Time-series Forecasting method, forecasting problems contain multiple variables keeping one variable as time fixed and others will be multiple in parameters.
Consider the same example, predicting the temperature of a city for the coming week, the only difference would come here now temperature will consider impacting factors such as
And then the temperature of the city will be predicted accordingly. All these factors are related to temperature and impact it vigorously.
(Related blog: Big data analytics in Weather Forecasting)
Time-Series Forecasting: Methods and Models in Machine Learning
Combinedly “ARIMA” tries to fit the data into the model, and also ARIMA depends on the accuracy over a broad width of time series.
It enables us to handle long structures during training the dataset and creates predictions according to previous data.
The blog ends here, we have discussed so far about time series analysis and its model, its role in financial analysis including various examples, and the impact of machine learning on time series along with applications.
6 Major Branches of Artificial Intelligence (AI)READ MORE
Reliance Jio and JioMart: Marketing Strategy, SWOT Analysis, and Working EcosystemREAD MORE
8 Most Popular Business Analysis Techniques used by Business AnalystREAD MORE
Top 10 Big Data TechnologiesREAD MORE
Elasticity of Demand and its TypesREAD MORE
What is PESTLE Analysis? Everything you need to know about itREAD MORE
An Overview of Descriptive AnalysisREAD MORE
5 Factors Affecting the Price Elasticity of Demand (PED)READ MORE
Dijkstra’s Algorithm: The Shortest Path AlgorithmREAD MORE
What Are Recommendation Systems in Machine Learning?READ MORE