Cluster Analysis Exercise: For questions 5 - 10, consider the following example and the XL Miner output provided in the Appendix. An equitiek analyst is studying the pharmaceutical industry and would like your help in exploring and understanding the financial data collected by her firm. Her main objective is to understand the structure of the pharmaceutical industry using some basic financial measures. Financial data gathered on 21 firms in the pharmaceutical industry are available, and for each firm, the following variables are recorded: 1) Market capitalization (in billions of dollars); 2) Beta, 3) Price/earning ratio, 4) Return on equity, 5) Return on assets, 6) Asset turnover, 7) Leverage, 8) Estimated revenue growth, and 9) Net profit margin. Cluster analysis is being used to explore and analyze the given dataset and a portion of the results appears below. Cluster centers ROA Rewr Marta.cap Cluster Out ROE 184 3335 GS 07 5371 12.95 . Lavere 101 OP 00 031 02 0.13 Rati 20170 16.5 25 45 304 21 60 10 0.41 0408 18 55 18 14 21.55 7.50 127 13 72 100 Cura Our Curs Clus 5175 23.4 3 17.68 112 17.75 0668 Cluster Clus Cluster Clu Chad Clu De centrs Cut 4667 20 2247201 1230 0164 10200104 18712 0 4611 4740 120167034 7021 11821 Clu Cher Oud Cute 16 370 142604 0 642227230 23492 11860270 222723 0 11662 16 M25077 1900104 2492031 52000164 Dummary TE Of the 6 clusters, which of the following pairs appear to be the most well- separated? Clusters 1 and 2 Clusters 2 and 5 Clusters 4 and 6 Clusters 3 and 6 D Question 6 3 pts Of the 6 casters, which of the following pairs appear to be closest together? Clusters 1 and 2 Clusters 3 and 5 Clusters 2 and 5 Clusters 3 and 6 Question 7 3 pts Which of the following clusters is the most homogeneous (tightest)? Cluster 4 Cluster 6 Cluster 1 O Cluster 5 D Question 8 3 pts Based on the results, do you recommend using more or less number of clusters for this data? O Less O More O No change 3 pts D Question 9 What is the centroid value for the measurement "return on assets" for Cluster 5? O 11.52 O 17.75 O 5.5 23.24 Question 10 The centroid value for the measurement {Leverage} is highest for: O Cluster 3 O Cluster 4 O Cluster 2 O Cluster 1 Cluster Analysis Exercise: For questions 5 - 10, consider the following example and the XL Miner output provided in the Appendix. An equitiek analyst is studying the pharmaceutical industry and would like your help in exploring and understanding the financial data collected by her firm. Her main objective is to understand the structure of the pharmaceutical industry using some basic financial measures. Financial data gathered on 21 firms in the pharmaceutical industry are available, and for each firm, the following variables are recorded: 1) Market capitalization (in billions of dollars); 2) Beta, 3) Price/earning ratio, 4) Return on equity, 5) Return on assets, 6) Asset turnover, 7) Leverage, 8) Estimated revenue growth, and 9) Net profit margin. Cluster analysis is being used to explore and analyze the given dataset and a portion of the results appears below. Cluster centers ROA Rewr Marta.cap Cluster Out ROE 184 3335 GS 07 5371 12.95 . Lavere 101 OP 00 031 02 0.13 Rati 20170 16.5 25 45 304 21 60 10 0.41 0408 18 55 18 14 21.55 7.50 127 13 72 100 Cura Our Curs Clus 5175 23.4 3 17.68 112 17.75 0668 Cluster Clus Cluster Clu Chad Clu De centrs Cut 4667 20 2247201 1230 0164 10200104 18712 0 4611 4740 120167034 7021 11821 Clu Cher Oud Cute 16 370 142604 0 642227230 23492 11860270 222723 0 11662 16 M25077 1900104 2492031 52000164 Dummary TE Of the 6 clusters, which of the following pairs appear to be the most well- separated? Clusters 1 and 2 Clusters 2 and 5 Clusters 4 and 6 Clusters 3 and 6 D Question 6 3 pts Of the 6 casters, which of the following pairs appear to be closest together? Clusters 1 and 2 Clusters 3 and 5 Clusters 2 and 5 Clusters 3 and 6 Question 7 3 pts Which of the following clusters is the most homogeneous (tightest)? Cluster 4 Cluster 6 Cluster 1 O Cluster 5 D Question 8 3 pts Based on the results, do you recommend using more or less number of clusters for this data? O Less O More O No change 3 pts D Question 9 What is the centroid value for the measurement "return on assets" for Cluster 5? O 11.52 O 17.75 O 5.5 23.24 Question 10 The centroid value for the measurement {Leverage} is highest for: O Cluster 3 O Cluster 4 O Cluster 2 O Cluster 1
