Data mining techniques

Data mining is the practice of automatically searching large stores of data to discover patterns and trends that go beyond simple analysis. Data mining uses sophisticated mathematical algorithms to segment the data and evaluate the probability of future events. Data mining is also known as Knowledge Discovery in Data (KDD). The key properties of data mining are: Automatic discovery of patterns Prediction of likely outcomes Creation of actionable information Focus on large data sets and databases Data mining functions represent a class of mining problems that can be solved using data mining algorithms. When creating a data mining model, you must first specify the mining function then choose an appropriate algorithm to implement the function if one is not provided by default. Classification Classification is a data mining function that assigns items in a collection to target categories or classes. The goal of classification is to accurately predict the target class for each case in the data. For example, a classification model could be used to identify loan applicants as low, medium, or high credit risks. A classification task begins with a data set in which the class assignments are known. For example, a classification model that predicts credit risk could be developed based on observed data for many loan applicants over a period of time. In addition to the historical credit rating, the data might track employment history, home ownership or rental, years of residence, number and type of investments, and so on. Credit rating would be the target, the other attributes would be the predictors, and the data for each customer would constitute a case.

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Data mining techniques

Classifications are discrete and do not imply order. Continuous, floating-point values would indicate a numerical, rather than a categorical, target. A predictive model with a numerical target uses a regression algorithm, not a classification algorithm. The simplest type of classification problem is binary classification. In binary classification, the target attribute has only two possible values: for example, high credit rating or low credit rating. Multiclass targets have more than two values: for example, low, medium, high, or unknown credit rating. In the model build (training) process, a classification algorithm finds relationships between the values of the predictors and the values of the target. Different classification algorithms use different techniques for finding relationships. These relationships are summarized in a model, which can then be applied to a different data set in which the class assignments are unknown. Classification models are tested by comparing the predicted values to known target values in a set of test data. The historical data for a classification project is typically divided into two data sets: one for building the model; the other for testing the model Regression Regression is a data mining function that predicts a number. Profit, sales, mortgage rates, house values, square footage, temperature, or distance could all be predicted using regression techniques. For example, a regression model could be used to predict the value of a house based on location, number of rooms, lot size, and other factors. A regression task begins with a data set in which the target values are known. For example, a regression model that predicts house values could be developed based on observed data for many houses over a period of time. In addition to the value, the data might track the age of the house, square footage, number of rooms, taxes, school district, proximity to shopping centers, and so on. House value would be the target, the other attributes would be the predictors, and the data for each house would constitute a case.

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Data mining techniques

In the model build (training) process, a regression algorithm estimates the value of the target as a function of the predictors for each case in the build data. These relationships between predictors and target are summarized in a model, which can then be applied to a different data set in which the target values are unknown. Anomaly Detection The goal of anomaly detection is to identify cases that are unusual within data that is seemingly homogeneous. Anomaly detection is an important tool for detecting fraud, network intrusion, and other rare events that may have great significance but are hard to find. Anomaly detection can be used to solve problems like the following: A law enforcement agency compiles data about illegal activities, but nothing about legitimate activities. How can suspicious activity be flagged? The law enforcement data is all of one class. There are no counter-examples. An insurance agency processes millions of insurance claims, knowing that a very small number are fraudulent. How can the fraudulent claims be identified? The claims data contains very few counter-examples. They are outliers. Clustering Clustering analysis finds clusters of data objects that are similar in some sense to one another. The members of a cluster are more like each other than they are like members of other clusters. The goal of clustering analysis is to find high-quality clusters such that the inter-cluster similarity is low and the intra-cluster similarity is high. Clustering, like classification, is used to segment the data. Unlike classification, clustering models segment data into groups that were not previously defined. Classification models segment data by assigning it to previously-defined classes, which are specified in a target. Clustering models do not use a target.

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Data mining techniques

Clustering is useful for exploring data. If there are many cases and no obvious groupings, clustering algorithms can be used to find natural groupings. Clustering can also serve as a useful data-preprocessing step to identify homogeneous groups on which to build supervised models. Clustering can also be used for anomaly detection. Once the data has been segmented into clusters, you might find that some cases do not fit well into any clusters. These cases are anomalies or outliers. Association rules Association is a data mining function that discovers the probability of the co-occurrence of items in a collection. The relationships between co-occurring items are expressed as association rules. Association rules are often used to analyze sales transactions. For example, it might be noted that customers who buy cereal at the grocery store often buy milk at the same time. In fact, association analysis might find that 85% of the checkout sessions that include cereal also include milk. This relationship could be formulated as the following rule. Cereal implies milk with 85% confidence This application of association modeling is called market-basket analysis. It is valuable for direct marketing, sales promotions, and for discovering business trends. Market-basket analysis can also be used effectively for store layout, catalog design, and cross-sell. Feature Selection Oracle Data Mining supports feature selection in the attribute importance mining function. Attribute importance is a supervised function that ranks attributes according to their significance in predicting a target. Finding the most significant predictors is the goal of some data mining projects. For example, a model might seek to find the principal characteristics of clients who pose a high credit risk.
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Data mining techniques

Attribute importance is also useful as a preprocessing step in classification modeling, especially for models that use Naive Bayes or Support Vector Machine. The Decision Tree algorithm includes components that rank attributes as part of the model build.

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