Harmonic Mean
Updated on March 10, 2023
Harmonic mean is a numerical average arrived at, by dividing the number of observations by the reciprocal of each number in the series.
The harmonic mean is the reciprocal of the inverse arithmetical mean. For example, the harmonic mean of 1, 2, and 2 will be calculated by dividing the number of observations, that is 3, by the reciprocal of each number :
3/(1/1+1/2+1/2)=3/2
Thus, Harmonic mean =1.5
The harmonic mean is also used in finance and technical analysis of markets. Harmonic mean is used in averaging things like rates or multiples, for instance, average travel speed over several trip durations.
Advantages of Harmonic Mean
Advantages of Harmonic mean are:
1. The harmonic mean is an effective measure because it takes into consideration all entries in the series.
2. It cannot be calculated if even a single item is missing.
3. It gives a significant weightage to smaller values in the series.
4. it can be calculated for a series with negative values.
Disadvantages of Harmonic Mean
Disadvantages of Harmonic mean are:
1. Its calculation can be complex and time-consuming.
2. If the series contains a zero value, the harmonic mean cannot be calculated.
3. High extreme values in the series can have an adverse impact on the results of harmonic mean calculation.
