Normalization of data is critical for statistical analysis and feature engineering.

Min-max Normalization

This method is linear and straightforward.

Suppose we are analyzing series A, with elements $a_i$. We already know the min and max of the series, $a_{min}$ and $a_{max}$.

Now we would like to normalize the series to be within the range $[a_{min}’, a_{max}’]$. We simply solve the value of $a’ _ i$ in where everything on the right hand side is known and $a_{min}’$ and $a_{max}’$ are chosen as the new min and max to be scaled to.

The problem with this method is that the min and max has to be known, which is not always the case.

Another problem is that outliers would have a big effect on this method. Such examples could be the prices of houses. There might be one house in the database that has an extremely low price such as 1 euro, or extermely high price such as one billion euros.

Z-score Normalization

Z-score normalization method normalizes the data using the standard deviation since standard deviation measures how are the data points devivate from the mean.

For a series with only one value, $a’_i = 0$. For series of the form $ (a, -a, a, -a) $ where $a> 0$,

Then we have the normalized series to be

Decimal Scaling

Basically shifting the data with some powers of 10.

choose $j$ so that the new values are not larger than 1.