# K-means Clustering: Algorithm, Application and Its Use case

8 min readJul 20, 2021

# Clustering

Clustering is one of the most common exploratory data analysis technique used to get an intuition about the structure of the data. It can be defined as the task of identifying subgroups in the data such that data points in the same subgroup (cluster) are very similar while data points in different clusters are very different. In other words, we try to find homogeneous subgroups within the data such that data points in each cluster are as similar as possible according to a similarity measure such as euclidean-based distance or correlation-based distance. The decision of which similarity measure to use is application-specific.

Clustering analysis can be done on the basis of features where we try to find subgroups of samples based on features or on the basis of samples where we try to find subgroups of features based on samples. We’ll cover here clustering based on features. Clustering is used in market segmentation; where we try to find customers that are similar to each other whether in terms of behaviors or attributes, image segmentation/compression; where we try to group similar regions together, document clustering based on topics, etc.

Unlike supervised learning, clustering is considered an unsupervised learning method since we don’t have the ground truth to compare the output of the clustering algorithm to the true labels to evaluate its performance. We only want to try to investigate the structure of the data by grouping the data points into distinct subgroups.

In this post, we will cover only Kmeans which is considered as one of the most used clustering algorithms due to its simplicity.

# Kmeans Algorithm

Kmeans algorithm is an iterative algorithm that tries to partition the dataset into Kpre-defined distinct non-overlapping subgroups (clusters) where each data point belongs to only one group. It tries to make the intra-cluster data points as similar as possible while also keeping the clusters as different (far) as possible. It assigns data points to a cluster such that the sum of the squared distance between the data points and the cluster’s centroid (arithmetic mean of all the data points that belong to that cluster) is at the minimum. The less variation we have within clusters, the more homogeneous (similar) the data points are within the same cluster.

The way kmeans algorithm works is as follows:

1. Specify number of clusters K.
2. Initialize centroids by first shuffling the dataset and then randomly selecting K data points for the centroids without replacement.
3. Keep iterating until there is no change to the centroids. i.e assignment of data points to clusters isn’t changing.
• Compute the sum of the squared distance between data points and all centroids.
• Assign each data point to the closest cluster (centroid).
• Compute the centroids for the clusters by taking the average of the all data points that belong to each cluster.

The approach kmeans follows to solve the problem is called Expectation-Maximization. The E-step is assigning the data points to the closest cluster. The M-step is computing the centroid of each cluster. Below is a break down of how we can solve it mathematically (feel free to skip it).

The objective function is:

where wik=1 for data point xi if it belongs to cluster k; otherwise, wik=0. Also, μk is the centroid of xi’s cluster.

It’s a minimization problem of two parts. We first minimize J w.r.t. wik and treat μk fixed. Then we minimize J w.r.t. μk and treat wik fixed. Technically speaking, we differentiate J w.r.t. wik first and update cluster assignments (E-step). Then we differentiate J w.r.t. μk and recompute the centroids after the cluster assignments from previous step (M-step). Therefore, E-step is:

In other words, assign the data point xi to the closest cluster judged by its sum of squared distance from cluster’s centroid.

And M-step is:

Which translates to recomputing the centroid of each cluster to reflect the new assignments.

Few things to note here:

• Since clustering algorithms including kmeans use distance-based measurements to determine the similarity between data points, it’s recommended to standardize the data to have a mean of zero and a standard deviation of one since almost always the features in any dataset would have different units of measurements such as age vs income.
• Given kmeans iterative nature and the random initialization of centroids at the start of the algorithm, different initializations may lead to different clusters since kmeans algorithm may stuck in a local optimum and may not converge to global optimum. Therefore, it’s recommended to run the algorithm using different initializations of centroids and pick the results of the run that that yielded the lower sum of squared distance.
• Assignment of examples isn’t changing is the same thing as no change in within-cluster variation:

# Implementation

We’ll use simple implementation of kmeans here to just illustrate some concepts. Then we will use `sklearn` implementation that is more efficient take care of many things for us.

# Applications

k means algorithm is very popular and used in a variety of applications such as market segmentation, document clustering, image segmentation and image compression, etc. The goal usually when we undergo a cluster analysis is either:

1. Get a meaningful intuition of the structure of the data we’re dealing with.
2. Cluster-then-predict where different models will be built for different subgroups if we believe there is a wide variation in the behaviors of different subgroups. An example of that is clustering patients into different subgroups and build a model for each subgroup to predict the probability of the risk of having heart attack.

In this post, we’ll apply clustering on two cases:

• Geyser eruptions segmentation (2D dataset).
• Image compression.

# where can i apply k-means?

k-means can typically be applied to data that has a smaller number of dimensions, is numeric, and is continuous. think of a scenario in which you want to make groups of similar things from a randomly distributed collection of things; k-means is very suitable for such scenarios.

here is a list of ten interesting use cases for k-means.

# 1. document classification

cluster documents in multiple categories based on tags, topics, and the content of the document. this is a very standard classification problem and k-means is a highly suitable algorithm for this purpose. the initial processing of the documents is needed to represent each document as a vector and uses term frequency to identify commonly used terms that help classify the document. the document vectors are then clustered to help identify similarity in document groups. here is a sample implementation of the k-means for document clustering.

# 2. delivery store optimization

optimize the process of good delivery using truck drones by using a combination of k-means to find the optimal number of launch locations and a genetic algorithm to solve the truck route as a traveling salesman problem. here is a whitepaper on the same topic .

# 3. identifying crime localities

with data related to crimes available in specific localities in a city, the category of crime, the area of the crime, and the association between the two can give quality insight into crime-prone areas within a city or a locality. here is an interesting paper based on crime data from delhi firs.

# 4. customer segmentation

clustering helps marketers improve their customer base, work on target areas, and segment customers based on purchase history, interests, or activity monitoring. here is a white paper on how telecom providers can cluster pre-paid customers to identify patterns in terms of money spent in recharging, sending sms, and browsing the internet. the classification would help the company target specific clusters of customers for specific campaigns.

# 5. fantasy league stat analysis

analyzing player stats has always been a critical element of the sporting world, and with increasing competition, machine learning has a critical role to play here. as an interesting exercise, if you would like to create a fantasy draft team and like to identify similar players based on player stats, k-means can be a useful option. check out this article for details and a sample implementation.

# 6. insurance fraud detection

machine learning has a critical role to play in fraud detection and has numerous applications in automobile, healthcare, and insurance fraud detection. utilizing past historical data on fraudulent claims, it is possible to isolate new claims based on its proximity to clusters that indicate fraudulent patterns. since insurance fraud can potentially have a multi-million dollar impact on a company, the ability to detect frauds is crucial. check out this white paper on using clustering in automobile insurance to detect frauds.

# 7. rideshare data analysis

the publicly available uber ride information dataset provides a large amount of valuable data around traffic, transit time, peak pickup localities, and more. analyzing this data is useful not just in the context of uber but also in providing insight into urban traffic patterns and helping us plan for the cities of the future. here is an article with links to a sample dataset and a process for analyzing uber data.

# 8. cyber-profiling criminals

cyber-profiling is the process of collecting data from individuals and groups to identify significant co-relations. the idea of cyber profiling is derived from criminal profiles, which provide information on the investigation division to classify the types of criminals who were at the crime scene. here is an interesting white paper on how to cyber-profile users in an academic environment based on user data preferences.

# 9. call record detail analysis

a call detail record (cdr) is the information captured by telecom companies during the call, sms, and internet activity of a customer. this information provides greater insights about the customer’s needs when used with customer demographics. in this article , you will understand how you can cluster customer activities for 24 hours by using the unsupervised k-means clustering algorithm. it is used to understand segments of customers with respect to their usage by hours.

# 10. automatic clustering of it alerts

large enterprise it infrastructure technology components such as network, storage, or database generate large volumes of alert messages. because alert messages potentially point to operational issues, they must be manually screened for prioritization for downstream processes. clustering of data can provide insight into categories of alerts and mean time to repair, and help in failure predictions.

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