Methods of Hierarchical Clustering

We survey agglomerative hierarchical clustering algorithms and discuss efficient implementations that are available in R and other software environments. We look at hierarchical self-organizing maps, and mixture models. We review grid-based clustering, focusing on hierarchical density-based approaches. Finally we describe a recently developed very efficient (linear time) hierarchical clustering algorithm, which can also be viewed as a hierarchical grid-based algorithm.Comment: 21 pages, 2 figures, 1 table, 69 reference

Relation between Financial Market Structure and the Real Economy: Comparison between Clustering Methods

We quantify the amount of information filtered by different hierarchical clustering methods on correlations between stock returns comparing it with the underlying industrial activity structure. Specifically, we apply, for the first time to financial data, a novel hierarchical clustering approach, the Directed Bubble Hierarchical Tree and we compare it with other methods including the Linkage and k-medoids. In particular, by taking the industrial sector classification of stocks as a benchmark partition, we evaluate how the different methods retrieve this classification. The results show that the Directed Bubble Hierarchical Tree can outperform other methods, being able to retrieve more information with fewer clusters. Moreover, we show that the economic information is hidden at different levels of the hierarchical structures depending on the clustering method. The dynamical analysis on a rolling window also reveals that the different methods show different degrees of sensitivity to events affecting financial markets, like crises. These results can be of interest for all the applications of clustering methods to portfolio optimization and risk hedging.Comment: 31 pages, 17 figure

Axiomatic Construction of Hierarchical Clustering in Asymmetric Networks

This paper considers networks where relationships between nodes are represented by directed dissimilarities. The goal is to study methods for the determination of hierarchical clusters, i.e., a family of nested partitions indexed by a connectivity parameter, induced by the given dissimilarity structures. Our construction of hierarchical clustering methods is based on defining admissible methods to be those methods that abide by the axioms of value - nodes in a network with two nodes are clustered together at the maximum of the two dissimilarities between them - and transformation - when dissimilarities are reduced, the network may become more clustered but not less. Several admissible methods are constructed and two particular methods, termed reciprocal and nonreciprocal clustering, are shown to provide upper and lower bounds in the space of admissible methods. Alternative clustering methodologies and axioms are further considered. Allowing the outcome of hierarchical clustering to be asymmetric, so that it matches the asymmetry of the original data, leads to the inception of quasi-clustering methods. The existence of a unique quasi-clustering method is shown. Allowing clustering in a two-node network to proceed at the minimum of the two dissimilarities generates an alternative axiomatic construction. There is a unique clustering method in this case too. The paper also develops algorithms for the computation of hierarchical clusters using matrix powers on a min-max dioid algebra and studies the stability of the methods proposed. We proved that most of the methods introduced in this paper are such that similar networks yield similar hierarchical clustering results. Algorithms are exemplified through their application to networks describing internal migration within states of the United States (U.S.) and the interrelation between sectors of the U.S. economy.Comment: This is a largely extended version of the previous conference submission under the same title. The current version contains the material in the previous version (published in ICASSP 2013) as well as material presented at the Asilomar Conference on Signal, Systems, and Computers 2013, GlobalSIP 2013, and ICML 2014. Also, unpublished material is included in the current versio

Robust hierarchical k-center clustering

One of the most popular and widely used methods for data clustering is hierarchical clustering. This clustering technique has proved useful to reveal interesting structure in the data in several applications ranging from computational biology to computer vision. Robustness is an important feature of a clustering technique if we require the clustering to be stable against small perturbations in the input data. In most applications, getting a clustering output that is robust against adversarial outliers or stochastic noise is a necessary condition for the applicability and effectiveness of the clustering technique. This is even more critical in hierarchical clustering where a small change at the bottom of the hierarchy may propagate all the way through to the top. Despite all the previous work [2, 3, 6, 8], our theoretical understanding of robust hierarchical clustering is still limited and several hierarchical clustering algorithms are not known to satisfy such robustness properties. In this paper, we study the limits of robust hierarchical k-center clustering by introducing the concept of universal hierarchical clustering and provide (almost) tight lower and upper bounds for the robust hierarchical k-center clustering problem with outliers and variants of the stochastic clustering problem. Most importantly we present a constant-factor approximation for optimal hierarchical k-center with at most z outliers using a universal set of at most O(z2) set of outliers and show that this result is tight. Moreover we show the necessity of using a universal set of outliers in order to compute an approximately optimal hierarchical k-center with a diffierent set of outliers for each k