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Compass Maritime Services LLC Valuing Ships Case Solution
A higher R-Square is a good fit in the terminology of regression. The individual regression outputs show the highest R-Square for Age at Sale. This means that this particular independent variable is the best predictor of the sale price of the ships.
Case Analysis for Compass Maritime Services LLC Valuing Ships
Regression is a statistical tool used primarily in the field of economics to find correlations between different variables. The relationship that any two or more than two variables have amongst themselves can be quantified through regression analysis. A regression analysis has been run for the different variables in this Compass Maritime Services LLC case. In the excel file, each sheet with its respective name has the regression output for each independent variable (feature) and the dependent variable (price). To decide whether the results derived through this regression are reliable i.e. statistically significant or not, let us look at the Significance F. This figure must be below 0.05 to be considered reliable. For all our independent variables, this is well below 0.05, which establishes the statistical significance of our model.
Secondly, to map the relationships between each independent variable and sale price, let us consider the Coefficients column. For every year increase in Age at Sale, the Sale Price of the ship goes down by $4.216. This depicts a negative relationship between age at sale and sale price.
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