Augment Your Trend Analytics with Advance Forecasting Methods
Written by Kirtika Banerjee, Marketing Content Creator at Systech
Trend analysis deploys a variety of statistical tools, all of which are available to business owners.
At the fundamental level, you can plot data points for visual classification of trends to clarify correlations between variables and identify “outliers” or random points that do not resonate. Data points can mold into moving averages to smooth random fluctuations. Business owners can apply spreadsheet software to set trend lines on mapped data or regression models. These include more variables to predict sales more accurately and forecast the impact of rising interest rates and seasonal changes.
The time-series data provides visual information to the variable nature of market expansion. Time series are scrutinized at regular intervals like hourly, daily, weekly, monthly, quarterly, and so on. Time series data is crucial when predicting a value that is changing over time using past data. In time series analysis, the goal is to determine the future value using the past data behaviours.
Simple Moving Average (SMA)
A simple moving average (SMA) is an exceptionally seamless type of forecasting technique. A simple moving average is calculated by adding up the last ‘n’ period’s value and then; dividing that number generated by ‘n’! So the moving average value is the forecast for the next period. Moving averages are essential for quickly distinguishing whether the worth is spurring in an uptrend or a downtrend based on the pattern captured to recognize trends. The SMA deals with historical data that includes more peaks and valleys. Probably it would be stock data, retail data, etc.
Exponential Smoothing (SES)
Exponential Smoothing indicates exponentially decreasing weights as the observation gets mature. Exponential Smoothing is usually a way of “mitigating” the data by removing sufficient “noise” (random effect) from the data by giving a better forecast. This method is suitable for forecasting data with no trend or seasonal pattern (alpha = Smoothing Constant).
Autoregressive Integration Moving Average (ARIMA)
The parameters used in ARIMA (P, d, q) refer to the autoregressive, integrated, and moving average parts of the data set. While forecasting, ARIMA supervises trends, seasonality, cycles, errors, and non-stationary aspects of a dataset. ARIMA is essentially used to predict future values using historical time series data. If you do not have 38-40 data points, then it is advisable to go for some other methods, as it works best when your data exhibits a steady pattern over time with the least amount of outliers.
Neural Network (NN)
Artificial neural network (ANN) is a machine learning approach that models the human brain and consists of several artificial neurons. Neural networks have the strength to derive meaning from complex data and can be used to detect the trend in the data, which cannot be detectable easily by the human eye or any computer techniques. The advantages of NN are Adaptive learning, self-organization, real-time operation, and fault tolerance. We can use NN in any industry type as it is very flexible and doesn’t require any algorithms.
Industrial Process Control
As suggested by Croston in 1972, this is a modification of Exponential Smoothing for sporadic demand product time series. The core value of this method includes the estimation of average demand volume besides the time interval length between two non-zero demands, called intermittent demand. Croston is an extraordinary forecasting method that renders value in certain limited circumstances.
The Croston method serves two levels - Initially, consider separate Exponential Smoothing measures produced from the average demand size. Subsequently, opt for the intermittent demand calculations. Next, it is used in the constant model form to predict future interest. Croston only measures the average of the periods in demand to calculate the frequency.
For more information on the statistical forecasting method, reach us at https://systechusa.com/ to know more about how our intelligent solutions can be tailor-made to combat your business challenges. If you seek to implement forecasting tools for your business, get in touch using our contact form.