**Definition:** Statistical analysis is the use of statistical data including varying variables, entities, and events to determine probabilistic or statistical relationships in quantitative manner.

## What Does Statistical Analysis Mean?

**What is the definition of statistical analysis?** This is done in many ways such as: regression formulas, means, r-squared calculations, and ratio analysis. The purpose of these methods is to take quantitative, or mathematical, data to determine the correlation between one or more variables or predict the possibility of a future event occurring again in similar situations.

Statistical analyzes are frequently used in business for company valuations and in many business decisions, such as stock holding and assessment. Stock volatility is one area where businesses frequently use this analysis to derive results. Businesses also analyze this data during risk management in order to assess the probability of a certain risk being incurred by a company and how substantial the risk may be. Companies also use regression formulas in order to test some of their more general hypotheses about the effect of a certain factor on their assets or market price of stock.

Let’s take a look at an example.

## Example

Johnny owns a social media company, FriendKeeper. Since its inception in 2005, the social media company has grown to unprecedented heights and is now a global force. However, recently Johnny has noticed that general membership on the website has declined in addition to new sign-ups. Johnny believes that one of the primary causes of this decline in numbers is due to the prevalence of news coverage by popular news sources on the ills of social media coverage. He decides to test this hypothesis. Johnny will thus take the following steps.

- Accumulate the quantitative data of the two variables in question.
- Put the data in a software program that can run some automatic statistical analyses.
- Run a linear regression.
- Analyze the r-coefficient and other relevant results.

After the analysis of the Pearson’s coefficient, Johnny will be able to determine whether the adverse news coverage on social media has had a negative impact on his membership.

## Summary Definition

**Define Statistical Analysis:** Statistical analysis means to evaluate models and formulas in an effort to find mathematical relationships between to variables.