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Correlation & Co-Efficient, Business Mathematics & Statistics Video Lecture | Business Mathematics and Statistics - B Com

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FAQs on Correlation & Co-Efficient, Business Mathematics & Statistics Video Lecture - Business Mathematics and Statistics - B Com

1. What is correlation and coefficient in business mathematics and statistics?
Ans. Correlation refers to the statistical relationship between two or more variables. It measures the strength and direction of the linear association between variables. Coefficient, on the other hand, quantifies the degree of correlation and ranges from -1 to +1. A coefficient of +1 indicates a perfect positive correlation, -1 indicates a perfect negative correlation, and 0 indicates no correlation.
2. How is correlation coefficient calculated in business mathematics and statistics?
Ans. The correlation coefficient is calculated using the following formula: r = (Σ((X - X̄)(Y - Ȳ)) / √(Σ(X - X̄)²Σ(Y - Ȳ)²) where X and Y are the values of the two variables, X̄ and Ȳ are their respective means, and Σ represents summation. This formula computes the covariance between the variables and divides it by the product of their standard deviations.
3. What does a positive correlation coefficient indicate in business mathematics and statistics?
Ans. A positive correlation coefficient indicates a direct or positive relationship between two variables. This means that as one variable increases, the other variable also tends to increase. For example, a positive correlation may be observed between the number of hours studied and the exam scores, suggesting that higher study hours are associated with higher scores.
4. How do you interpret a correlation coefficient in business mathematics and statistics?
Ans. The magnitude and sign of the correlation coefficient provide information about the strength and direction of the relationship between variables. A correlation coefficient close to +1 or -1 indicates a strong association, while a coefficient close to 0 suggests a weak or no relationship. The sign (+ or -) indicates the direction of the relationship, with + indicating a positive correlation and - indicating a negative correlation.
5. Can correlation coefficient be used to establish causation in business mathematics and statistics?
Ans. No, correlation coefficient alone cannot establish causation between variables. It only quantifies the degree of linear association. Causation requires additional evidence and analysis. Correlation may exist due to various factors, such as coincidence, third variables, or underlying causal mechanisms. Therefore, it is important to consider other factors and conduct further research to establish causation.
115 videos|142 docs
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