Project on Data Analysis of Hawaiian Electric Corporation

Running Head: HAWAIIAN ELECTRIC SHARE PRICE PREDICTION
Hawaiian Electric Share Price Prediction
Name of the Student
Name of the University
Author Note

HAWAIIAN ELECTRIC SHARE PRICE PREDICTION1
Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Data Description........................................................................................................................3
3.0 Variance Inflation Factor (VIF).................................................................................................4
4.0 Residual Analysis......................................................................................................................5
5.0 Analysis of Variance (ANOVA)...............................................................................................6
6.0 Coefficient of Determination (R2).............................................................................................6
7.0 Hypothesis Testing....................................................................................................................7
8.0 Regression Coefficients.............................................................................................................8
9.0 Prediction of Share Price...........................................................................................................8
10.0 Conclusion...............................................................................................................................9
References......................................................................................................................................10
Appendix A: VIF Values...............................................................................................................11

HAWAIIAN ELECTRIC SHARE PRICE PREDICTION2
1.0 Introduction
The main aim of this project is to perform the analysis on the data received from
Hawaiian Electric Corporation and identify whether this is suitable enough to predict future
changes in the corporation prices. The corporation conducts various businesses. These selling the
electricity or providing the facility to various places.
Daily data will be used to run this analysis. The correlation between the daily price
changes will be measured using multiple regression analysis. The variance Inflation factor (VIF),
adjusted R2, Analysis of Variance (ANOVA) and residual analysis will be discussed.
2.0 Data Description
The data set consists of 382 data points, which include 382 trading days. 6 input
measurements are considered for each day. Out of them, 5 are input measurements and one of
them is the output measurement. The last column indicates the future changes in the share prices
of the companies that is the changes from the close of trading today to the opening of trading
tomorrow morning. The other columns include information of the changes in price of various
financial instruments. These include
 The price of the same company’s shares
 Interest rates
 Currency exchange rates
 Price of oil
The changes in price have been ranked and sorted. The number ranges from 0 to 1 where
 “1” indicates the highest value

HAWAIIAN ELECTRIC SHARE PRICE PREDICTION3
 “0.5” indicates the median value
 “0” indicates the least value.
Hawaiian Electric Industries, Inc., through its subsidiaries, engages in the electric utility
and banking businesses primarily in the state of Hawaii. The segment of electric utility of the
company generates purchases, transmits, distributes and sells electric energy. It generates
renewable energy sources and potential energy sources with the help of wind, solar, photovoltaic,
geothermal, hydroelectric, wave, municipal waste, sugarcane wastes and bio fuels. This electric
segment of the company distributes and sells electricity on different islands of Hawaii, Oahu,
Lanai, Molokai and Maui. It also serves the suburban communities, resorts, installation of the
armed forces of the United States, agricultural operations. There is also a bank segment of the
organization, which operates various accounts such as a savings account, money market,
checking and certificates of deposit. It also deals with the loans of residential and commercial
real estate, mortgages, constructions, developments, multifamily (both residential and
commercial real estates) and businesses. The Hawaiian Electric Industries has its headquarter in
Honolulu, Hawaii and was founded in the year 1891.
3.0 Variance Inflation Factor (VIF)
The variance inflation Factor (VIF) test is used to test the multicollinearity between the
variables. When two or more dependent variables are found to be highly correlated, then the
problem of multicollinearity arises (García et al., 2015). In the presence of multicollinearity in a
data, model fitting becomes difficult.
PHStat function was used in Excel to find the VIF for all the input variables. The variable
will be termed as highly correlated if the VIF > 5 and will be less correlated if VIF < 5. In this