Applications of Clustering in HR and Finance
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Questions and Answers

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?

    <p>Based on their common characteristics</p> Signup and view all the answers

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

    <p>Marketing strategy formulation</p> 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?

    <p>'Distance' measuring closeness between points</p> Signup and view all the answers

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

    <p>To identify employee skills, performance, and attrition</p> Signup and view all the answers

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

    <p>Balanced portfolios based on risks</p> Signup and view all the answers

    How do clustering methods measure similarity between observations?

    <p>Using a similarity metric known as the distance</p> Signup and view all the answers

    What does a large distance between two observations imply?

    <p>They are less similar to each other</p> Signup and view all the answers

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

    <p>By analyzing revenue growth and market capital</p> Signup and view all the answers

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

    <p>By diversifying risks within the portfolio</p> Signup and view all the answers

    What is the primary goal of clustering analysis?

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

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

    <p>Cosine similarity</p> Signup and view all the answers

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

    <p>Close to one another</p> Signup and view all the answers

    What is one common application of clustering in finance?

    <p>Identifying hidden relationships in unlabelled financial data</p> Signup and view all the answers

    Which clustering method focuses on creating a hierarchy of clusters?

    <p>Hierarchical clustering</p> Signup and view all the answers

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

    <p>Representatives for homogeneous groups</p> Signup and view all the answers

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