PPT - Correlation & Co-Efficient B Com Notes | EduRev

Business Mathematics and Statistics

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B Com : PPT - Correlation & Co-Efficient B Com Notes | EduRev

 Page 1


Coefficient of correlation
Page 2


Coefficient of correlation
A statistic representing how closely two 
variables co-vary; it can vary from -1 
(perfect negative correlation) through 0 
(no correlation) to +1 (perfect positive 
correlation).
Page 3


Coefficient of correlation
A statistic representing how closely two 
variables co-vary; it can vary from -1 
(perfect negative correlation) through 0 
(no correlation) to +1 (perfect positive 
correlation).
• The correlation coefficient, denoted by r, is a 
measure of the strength of the straight-line or 
linear relationship between two variables. The 
correlation coefficient takes on values ranging 
between +1 and -1. 
• The quantity r, called the linear correlation 
coefficient, measures the strength and the 
direction of a linear relationship between two 
variables
Page 4


Coefficient of correlation
A statistic representing how closely two 
variables co-vary; it can vary from -1 
(perfect negative correlation) through 0 
(no correlation) to +1 (perfect positive 
correlation).
• The correlation coefficient, denoted by r, is a 
measure of the strength of the straight-line or 
linear relationship between two variables. The 
correlation coefficient takes on values ranging 
between +1 and -1. 
• The quantity r, called the linear correlation 
coefficient, measures the strength and the 
direction of a linear relationship between two 
variables
Type of correlation coefficient
1. Perfect Positive correlation
2. Perfect negative correlation 
3. Moderately Positive correlation
4. Moderate negative correlation 
5. Absolute no correlation 
Page 5


Coefficient of correlation
A statistic representing how closely two 
variables co-vary; it can vary from -1 
(perfect negative correlation) through 0 
(no correlation) to +1 (perfect positive 
correlation).
• The correlation coefficient, denoted by r, is a 
measure of the strength of the straight-line or 
linear relationship between two variables. The 
correlation coefficient takes on values ranging 
between +1 and -1. 
• The quantity r, called the linear correlation 
coefficient, measures the strength and the 
direction of a linear relationship between two 
variables
Type of correlation coefficient
1. Perfect Positive correlation
2. Perfect negative correlation 
3. Moderately Positive correlation
4. Moderate negative correlation 
5. Absolute no correlation 
Perfect Positive correlation
• If x and y have a strong positive linear correlation, 
r is close to +1. An r value of exactly +1 
indicates a perfect positive fit. Positive values 
indicate a relationship between x and y variables 
such that as values for x increases, values for y 
also increase. 
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