Calculation of odds: probability and deviation

In summary: You will first need to subtract the probability from 1 (getting 0.9586) and then multiply that by 2.08. This will give the answer 2.17.
  • #1
sfairbrother243
1
0
*WARNING* My understanding of maths is pretty limited and i don't know if i am being really stupid or not.

Ive been looking into data analysis of football matches, working out proabilities of certain situations happening and how steady the averages are. i come across a website which as really helped me understand some of these concepts. But 2 calculations have left me stumped and i don't know if it is me being stupid or the author getting something wrong?

the author had gone through all matches in prem league from 2005/10 showing % of home, draws and away wins. she then worked out the means for these, then went into the relative and absolute deviation then ended with using this data to obtain the minimum and maximum odds:

The formula for the computation of odds is as follows:
Home win: 48.16% probability results in a price of 2.08 (1 divided by 48.16%)

The minimum odds are computed as follows:
Home win: 2.08 calculated odds multiplied by (1 minus ‘error’(relative deviation) 4.14%) = 1.99

The maximum odds are computed as follows:
Home win: 2.08 calculated odds multiplied by (1 plus ‘error’(relative deviation) 4.14%) = 2.17

am i being very stupid as to why i can't get 1.99 and 2.17 as my answers?

many thanks guys!
 
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  • #2
sfairbrother243 said:
*WARNING* My understanding of maths is pretty limited and i don't know if i am being really stupid or not.

Ive been looking into data analysis of football matches, working out proabilities of certain situations happening and how steady the averages are. i come across a website which as really helped me understand some of these concepts. But 2 calculations have left me stumped and i don't know if it is me being stupid or the author getting something wrong?

the author had gone through all matches in prem league from 2005/10 showing % of home, draws and away wins. she then worked out the means for these, then went into the relative and absolute deviation then ended with using this data to obtain the minimum and maximum odds:

The formula for the computation of odds is as follows:
Home win: 48.16% probability results in a price of 2.08 (1 divided by 48.16%)

The minimum odds are computed as follows:
Home win: 2.08 calculated odds multiplied by (1 minus ‘error’(relative deviation) 4.14%) = 1.99

The maximum odds are computed as follows:
Home win: 2.08 calculated odds multiplied by (1 plus ‘error’(relative deviation) 4.14%) = 2.17

am i being very stupid as to why i can't get 1.99 and 2.17 as my answers?

many thanks guys!
What you have to remember here is that a percentage is measured on a scale from 0 to 100, whereas a probability is measured on a scale from 0 to 1. What that means is that to convert a percentage of 4.14% to a probability you have to divide it by 100, getting 0.0414. The formula for "minimum odds" say that you need to subtract this probability from 1 (getting 0.9586) and then multiply that by 2.08. That gives the answer 1.99 (to two decimal places). The calculation for the "maximum odds" will be similar.
 

FAQ: Calculation of odds: probability and deviation

What is the difference between probability and odds?

Probability refers to the likelihood of an event occurring and is expressed as a fraction, decimal, or percentage. Odds, on the other hand, represent the ratio of the likelihood of an event occurring to the likelihood of the event not occurring and are expressed as a ratio or a decimal. For example, a probability of 0.5 is equivalent to odds of 1:1 or 1, while a probability of 0.25 is equivalent to odds of 1:3 or 0.33.

How do you calculate odds from probability?

To calculate odds from probability, you can use the formula: Odds = Probability / (1 - Probability). For example, if the probability of an event is 0.6, the odds would be 0.6 / (1 - 0.6) = 0.6 / 0.4 = 1.5 or 3:2.

What is deviation in probability and how is it calculated?

Deviation in probability refers to the amount by which the actual outcome of an event differs from the expected outcome. It is calculated by finding the difference between the actual probability and the expected probability, and then taking the absolute value of that difference. This helps to measure the degree of uncertainty in the outcome of an event.

How do you interpret odds and deviation in probability?

Odds can be interpreted as the risk associated with an event, with higher odds indicating a higher risk. For example, if the odds of winning a game are 1:10, it means that you are more likely to lose than to win. Deviation in probability can be interpreted as a measure of how reliable or accurate the expected probability is. A smaller deviation indicates a more reliable prediction, while a larger deviation indicates a less reliable prediction.

How are odds and probability used in real-life situations?

Odds and probability are used in various fields, including gambling, finance, and insurance. In gambling, odds are used to determine the payouts for different bets, while probability is used to calculate the likelihood of winning. In finance, probability is used to assess the risk associated with investments, while odds are used to determine the potential returns. In insurance, probability is used to calculate premiums based on the likelihood of certain events occurring, while odds are used to determine the level of coverage.

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