In: Finance
Nonparametric techniques of hypothesis testing are applicable for many quality engineering problems and projects. The nonparametric tests are often called “distribution-free” since they make no assumption regarding the population distribution. Nonparametric tests may be applied ranking tests in which data is not specific in any continuous sense, but are simply ranks. Parametric tests are generally more powerful and can test a wider range of alternative hypotheses. It is worth repeating that if data are approximately normally distributed then parametric tests (as in the modules on hypothesis testing) are more appropriate. However, there are situations in which assumptions for a parametric test are violated and a nonparametric test is more appropriate.
THERE ARE MANY NON PARAMETRIC TEST , ONE OF THEM ARE -
The Spearman Rank Correlation Coefficient (rs)
The Spearman correlation coefficient is a measure of association
which requires that both variables be measured in at least an
ordinal scale so that the samples or individuals to be analyzed may
be ranked in two ordered series. If one of the series is continuous
and one is ranked, then both series must be ranked. If both series
contain continuous data from an unknown distribution, both series
must be ranked.
Example: The ten rank sums from the Kendall
coefficient example are ranked from largest to smallest. The rank
numbers from 1 through 10 are then assigned to the ranked panel
sums. For the same samples, the handleometer values are ranked and
then assigned the integer values from 1 through 10. The differences
between the paired ranks are squared and summed.N = 10. If N is equal to or
greater than 10, the following correlation equation can be used.
The strong correlation (0.97) between the ranked handleometer variable measurements and the ranked panel subjective sensory responses of judges, shows that the handleometer could replace people. The handleometer values can be obtained more quickly, with greater objectivity, and with a longer life span than individuals. The lab manager was disappointed to learn that the instrument would not be purchased, due to the objections presented before the analysis.
PLEASE TELL SPECIFICALLY WHICH NON PARAMETRIC TEST EXAMPLE YOU NEED AMONG
Assinging ranks
Kendall Coefficient of Concordance
Kruskal-Wallis One-Way Analysis of Variance by Ranks
Mann-Whitney U Test
EXAMPLE OF SPEARMAN COEFFICIENT IS GIVEN BECAUSE IT IS MOST COMMON USED NON PARAMETRIC TEST
PLEASE APPRECIATE THE WORK