Trend

The trend is the long-term movement of a time series. Any increase or decrease in the values
of a variable occurring over a period of several years gives a trend. If the values of a variable
remain statutory over several years, then no trend can be observed in the time series.

Methods of Fitting a Straight Line to a Time Series

1. Free hand method

2. The method of semi-averages

3. The method of moving averages

4. The method of least squares.

Free hand method:

First the time series figures are plotted on a graph. The points are joined by straight lines.
We get fluctuating straight lines, through which an average straight line is drawn. This
method is however, inaccurate, since different persons may fit different trend lines for the
same set of data.

Method of Semi Averages:

The given time series is divided into two parts, preferably with the same number of years.
The average of each part is calculated and then a trend line through these averages is filled.

Moving Average Method:

A regular periodic cycle is identified in the time series. The moving average of n years is got
by dividing the moving total by n. The method is also used for seasonal and cyclical
variation.

Method of Least Squares:

The equation of a straight line is Y=A+bX, where X is the time period, say year and Y is the
value of the item measured against time, a is the Y intercept and b, the co-efficient of X,
indicating the slope of the line. To find a and b, the following normal equations are solved.

Y= an + b X

XY= a X + b X

Where n is the no. of observation in the series or n = no. of data items.

Probability is a numerical measure which indicates the chance of occurrence of an event 'A'.
It denoted by P(A). It is the ratio between the favorable outcomes of an event 'A' (m) to the
total outcomes of the experiment (n). In other words: P(A) = m / n.

It gets more interesting when you have two dice. One thing that you can do is work out
what the total of the dice is. The dice experiment allows you to simulate throwing pairs of
dice and see what the result is. This is a good introduction to probability, since you can see
which combinations are more likely. But the real world, or even a simulated real world, never
matches completely with calculated probability. So how do we calculate it? The first thing is
to work out what the range is. You can't have a total less than 2 (both dice being 1) and you
can't have a total more than 12 (both dice being 6). The easiest way to see what the
probabilities is to write out the possible totals. There are 36 of them in all (6 x 6).

Let A be the probability of getting a sum of nine.

Total of nine can be obtained;

n(S) = 6*6 = 36

Total number of Favorable Outcomes A = (6, 3) (3, 6) (4, 5) (5, 4)

Hence P(A) = Favorable Outcomes [n(A)] / Total Number of Outcomes [n(S)]

= 4 / 36 = 1 / 9