[R-SIG-Finance] Principal Component Analysis in Credit Risk

Daniel Melendez danielmelendez at alum.northwestern.edu
Wed Sep 16 20:06:08 CEST 2015

I'm assuming based off of the information you have provided I think you may
want to look into factor analysis.  Try the psych package, it'll provide a
good base.  Plus you might want to look into cluster analysis and some
other forms of grouping techniques.

On Wed, Sep 16, 2015 at 12:50 PM, Amelia Marsh via R-SIG-Finance <
r-sig-finance at r-project.org> wrote:

> Dear Forum,
> I need some direction and guidance. This perhaps may sound a vague
> question, but I will try to be specific as far as possible.
> Recently I came to know about text analysis in R. Assuming I have analysts
> reports regarding say 250 companies. I am aware that out of these 25
> companies, 5 companies have defaulted. I have been asked to apply principal
> component analysis to each of these 25 companies to find out those words
> which if are occurring in say the 26th companies Analyst report, it will
> give me clear indication that this company will default.
> I understand this is really a vague question. To begin with, can Principal
> Component Analysis be used for text and if yes, can someone give me some
> direction or source.
> Regards
> Amelia
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Daniel Melendez


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