Data Organization for Quantitative Analysis

Typically, raw data can be organized into the following two formats for quantitative analysis:

• One-dimensional array: A one-dimensional array is the simplest format for representing a single variable, such as the daily trading volume of the stock exchange.

• Two-dimensional rectangular array: A two-dimensional rectangular array (also called a data table) is a format that consists of columns and rows for representing multiple variables and multiple observations.  The image below is an example:

Example: One-dimensional Array and Two-dimensional Array

Refer to the following two arrays and identify the one which is one-dimensional and the other which is two-dimensional.

$$\begin{array}{}\textbf{Array 1}\end{array}$$

$$\begin{array}{l|c|c|c|c} \textbf{Year}&\textbf{2017}&\textbf{2018}&\textbf{2019}&\textbf{2020}\\ \hline \text{Closing price of}&5.7&5.22&5.13&5.17\\ \text{stock (in USD)}&{}&{}&{}&{}\\ \end{array}$$

$$\begin{array}{}\textbf{Array 2}\end{array}$$

$$
\begin{aligned}
&\textbf { Fertilizer Sector Profit after Tax (PKR MN) } \\
&\begin{array}{c|c|c}
\textbf { Company } & \textbf { 2QFY21 } & \textbf { 2QFY22 } \\
\hline \text { A } & 2,315 & 981 \\
\hline \text { B } & 2,478 & 272 \\
\hline \text { C } & 820 & 222 \\
\hline \text { D } & 965 & 10 \\
\end{array}
\end{aligned}
$$

Solution

Array 1 represents a one-dimensional array, while Array 2 represents a two-dimensional array.

Question

Which of the following statements is most likely correct? A two-dimensional array is:

1. Most suitable for organizing raw panel data.
2. Suitable for organizing raw time-series data of a single variable.
3. Appropriate for organizing raw cross-sectional data.

Solution

The correct answer is A.

Remember that panel data consist of observations made on one or more variables for multiple observational units. In other words, panel data is a combination of time series data and cross-sectional data.

Therefore, a two-dimensional array would be suitable for organizing panel data. This is because it consists of columns to accommodate variable(s) for the observational units and rows that accommodate the observations made through time.

B is incorrect. A one-dimensional array is suitable for organizing time-series data of a single variable.

C is incorrect. A one-dimensional array is suitable for organizing cross-sectional data.