Copyright © 2006 Elsevier B.V. All rights reserved.
Stochastics and Statistics
A hyperspherical transformation forecasting model for compositional data
Received 3 June 2004;
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Abstract
Although Aitchison’s [Aitchison, J., 1986. The Statistical Analysis of Compositional Data, Chapman and Hall, London] method of logratio transformation of compositional data is widely used in various domains, it is limited by the assumption of a strict non-negativity of the components and the requirement of special treatments in practice of the zero components. We propose a dimension-reduction approach through a hyperspherical transformation that is capable of resolving the difficulty in maintaining non-negativity and unit-sum in forecasting compositional data over time. Applying the proposed model to a numerical simulation with a 4D compositional data embedded with zero components and forecasting the three production sectors in the Chinese economy both demonstrate the usefulness and validity of the new approach.
Keywords: Forecasting; Data Analysis; Compositional Data Analysis
Article Outline
- 1. Introduction
- 2. The DRHT forecasting model for compositional data
- 3. Applications
- 3.1. Empirical simulation with zero components
- 3.2. Forecasting the trend of the primary, secondary, and tertiary components in the Chinese economy
- 4. Conclusions
- Acknowledgements
- Appendix A. Dimensionality reduction through hyperspherical transformation
- References







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