What is a scatter plot? How to draw and analyze Scatter diagram

Scatter charts were created with the purpose of visualizing data between two continuous variables. Charts are used in business, data science, statistics and many other fields. Although commonly used, not all businesses understand exactly what a scatter chart is, its advantages and disadvantages. Let's learn about this interesting topic with 1C Vietnam in the article below!

1. What is a scatter plot?

Scatter diagram is a graph that shows the relationship between two variables according to mathematical coordinates. In particular, the horizontal axis Ox represents the value of the independent variable, used to make predictions; The Oy axis represents the value of the dependent variable (predictor variable).

In fact, a scatter plot shows the relationship between factors that affect quality or the correlation between cause and effect. By drawing a scatter chart, businesses can grasp the results of the dependent variable based on the independent variable.

2. Advantages and disadvantages of scatterplots

Scatter charts are used by many businesses because of the following outstanding advantages:

• Drawing charts is done easily
• Correlations between variables and data trends are clearly shown
• All data (including outliers) are represented from smallest to largest
• Can be applied in many fields, industries and for many different data types.

Besides the above advantages, the scatter chart still has some disadvantages below:

• Judging solely based on the chart is somewhat subjective
• It is difficult to give accurate results based on the correlation coefficient between variables
• The variables that need to meet the condition are continuous variables, causing difficulty in data collection
• Each chart can only represent 2 variables

3. Types of scatter charts used in Excel

Excel is one of the commonly used tools for drawing scatter plots . Usually charts on Excel are represented by dots. Some common types that businesses often use are:

• Scatter with Smooth Lines: The scatter plot shows only curved lines and no dots.
• Scatter with Smooth Lines and Markers: The scatter chart displays rounded dots and curved lines.
• Scatter with Straight Lines: The scatter chart only shows straight lines and does not show dots.
• Scatter with Straight Lines and Markers: The scatter chart displays dots and straight lines.

4. Basic steps to draw a scatter plot

So how can we draw a complete scatter plot ? Below are 4 simple steps compiled by 1C Vietnam for businesses to refer to:

• Step 1: Collect data about pairs of variables. Usually more than 30 pairs of variables are needed for the model to produce results.
• Step 2: Draw a scatter plot with the vertical axis as a variable and the horizontal axis as the result of that variable.
• Step 3: Represent points on the chart with straight lines showing the correlation between two variables. If the points overlap, they need to be distinguished by different characters.
• Step 4: Evaluate the relationship of two variables through the correlation coefficient. Specifically:
  • A positive correlation coefficient shows a positive correlation; an increase in the independent variable will lead to an increase in the dependent variable.
  • A correlation coefficient of 0 indicates that there is no correlation between the two selected variables.
  • A negative correlation coefficient shows a negative correlation, where an increase in the independent variable will lead to a decrease in the dependent variable.

5. Notes when using analytical scatter charts

When applying split diagrams to analyze actual data, businesses need to pay attention to factors that influence and impact variables. There are 5 particularly important factors as follows:

• When a chart is formed, the more it resembles a straight line, the closer the relationship between the data is.
• Even if a scatter plot shows a business a relationship between two variables, don't rush to conclude that one variable causes the other. It is also possible that both variables are being influenced by a third variable.
• When the scatter plot does not show the relationship between two variables, it is necessary to review the data to see if stratification can be performed.
• Statistics (N and Q) determine whether the data have reasonable certainty that a relationship exists. If the statistics don't show any relationship then the pattern may just be happening by chance.
• In case the scatter chart does not show any relationship, businesses should consider whether the independent variable on the Ox axis has changed much. Sometimes the results are not clear because the input data is not extensive enough.  

A scatter plot is a graph that shows the relationship between two variables according to mathematical coordinates and is often used to represent the correlation between factors affecting each other in business, scientific research,... Combined with scatter charts , businesses can apply modern business management software such as 1C:Company Management. This is a software that allows centralized management and storage of information, providing a diverse reporting system, from which businesses can easily evaluate business data and propose improvement measures. For detailed information about this solution, please contact 1C Vietnam immediately for support.