Time series analysis
Measurement of trend
Free hand method,and
semi average method
MEASUREMENT OF TREND
The various methods by which trend values can be determined are:
1. Freehand or Graphic Method
2.Method of Semi-averagcs
3.Method of Moving Averages
4.Method of Least Squares
l. Free hand or Graphic Method or trend by inspection.This is the simplest of all the methods of finding out the trend values.First of all, the values of a time series are plotted on a graph paper in the form of a histogram. After this, a freehand smoothed curve is drawn through these points in such a way that the curve represents the general tendency of the data. In the process of drawing a smooth curve. the seasonal, cyclical and irregular variations are eliminated. However. it is very difficult to draw a freehand smooth curve and different persons are likely to draw different curves from the same data
Merits and Limitations of Freehand Curve
The chief merit of this method is that it is very simple. It is flexible also as it can represent both linear and non-linear trends.The main demerit of this method is that it is highly subjective. Different personswill get different lines or curves‘ Since the curve is subjective in nature, it cannot beused for forecasting trend values. Dependable freehand curves can be drawn onlyby experienced persons, not by_novices.
2. Method of Semi Averages
In this method, as the name it self suggests, semi-averages are calculated tofind out the trend values. By semi averages is meant, the averages of the two halves of a series. The averages (usually, arithmetic average) of the value oft hese two values would be found out. These average values would be plotted against the mid-value of each half. The two points are then joined by a straight line which can be extended on either side. This would be the trend line. If the number of years is odd, say, nine then the value of the middle year is committed to get two equal halves.
Examples ;
