Applications of Clustering in HR and Finance

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What is the primary objective of cluster analysis?

Grouping observations based on their similarities (correct)

Grouping observations based on their average characteristics

Grouping observations based on their distance from each other

Grouping observations based on their differences

In which type of space is it possible to measure distance in real numbers?

Space with discrete values

Euclidean space (correct)

Space with high variability

Non-euclidean space

What does a centroid represent in the context of clustering?

The least representative point in a cluster

An average or center of a cluster (correct)

A random element in a cluster

A typical element of a cluster

How are observations typically divided in cluster analysis?

Based on their common characteristics Signup and view all the answers

Which application area involves segmenting customers based on demographics and transaction history?

Marketing strategy formulation Signup and view all the answers

What is used as a means to determine the 'similarity' of two or more points in some d-dimensional space?

'Distance' measuring closeness between points Signup and view all the answers

What is the purpose of clustering based on interests, demographics, gender, and salary in HR?

To identify employee skills, performance, and attrition Signup and view all the answers

In finance, what type of portfolios can be created using clustering analysis?

Balanced portfolios based on risks Signup and view all the answers

How do clustering methods measure similarity between observations?

Using a similarity metric known as the distance Signup and view all the answers

What does a large distance between two observations imply?

They are less similar to each other Signup and view all the answers

In what way can clusters help a business in finance understand market positioning?

By analyzing revenue growth and market capital Signup and view all the answers

How can selecting stocks from different clusters benefit creating a balanced portfolio?

By diversifying risks within the portfolio Signup and view all the answers

What is the primary goal of clustering analysis?

To identify hidden groups or structures in a set of unlabelled data Signup and view all the answers

Which measure is used to compute the similarity between observations in clustering?

Cosine similarity Signup and view all the answers

How are points in a cluster typically related to each other?

Close to one another Signup and view all the answers

What is one common application of clustering in finance?

Identifying hidden relationships in unlabelled financial data Signup and view all the answers

Which clustering method focuses on creating a hierarchy of clusters?

Hierarchical clustering Signup and view all the answers

In clustering, what does the concept of 'natural clusters' refer to?

Representatives for homogeneous groups Signup and view all the answers