Z-NormalisationZ-Score

Z-Score

• Formula:
  $Z=\frac{(X-\mu )}{\sigma }$
  • $X$: Data point
  • $\mu$: Mean of the dataset
  • $\sigma$: Standard deviation of the dataset
• Procedure:
  • Set a threshold (commonly $|Z|>3$). Points exceeding the threshold are anomalies.

2. Modified Z-Score

• Formula:
  $M=\frac{0.6745\cdot (X-\text{median})}{\text{MAD}}$
  • $MAD$: Median Absolute Deviation
• Procedure:
  • Use this method for datasets with extreme outliers.
  • Points with $M>3.5$ are typically anomalies.