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Project Work On Quantitative Techniques: Correlation Analysis

This document contains a student's project work on correlation analysis. It defines correlation as a measurement of the relationship between two or more variables. There are two types of correlation: positive correlation, where variables change in the same direction, and negative correlation, where they change in opposite directions. The document then describes Karl Pearson's coefficient of correlation method formula for calculating the correlation coefficient between two variables. It provides an example of using this formula to calculate the correlation between two sets of data.

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Jai Prakash
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29 views3 pages

Project Work On Quantitative Techniques: Correlation Analysis

This document contains a student's project work on correlation analysis. It defines correlation as a measurement of the relationship between two or more variables. There are two types of correlation: positive correlation, where variables change in the same direction, and negative correlation, where they change in opposite directions. The document then describes Karl Pearson's coefficient of correlation method formula for calculating the correlation coefficient between two variables. It provides an example of using this formula to calculate the correlation between two sets of data.

Uploaded by

Jai Prakash
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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PROJECT WORK ON QUANTITATIVE TECHNIQUES

CORRELATION ANALYSIS

NAMES OF STUDENTS

SIGNATURES

1. _Arpit Chandora______

____________________

PGDM-I (2010-12)

CORRELATION ANALYSIS
CORRELATION is measurement or tool of measuring the relationship or associationship between two or more variable. Another definition isA statistical technique that is used to analyse the strength and direction of the relationship between two quantitative variables, is called correlation analysis. Examples of correlation are Family income and expenditure on luxury items. Frequency of smoking and lung damage. Weight and height of individuals. TYPES OF CORRELATION Correlation can be divided into two group. They are as follows: 1. Positive correlation 2. Negative correlation 1.Positive correlation When their is some flow of information in the same direction, it is called positive correlation. If values of variables are increasing or decreasing in the same direction then it is referred to positive correlation. Example x- 5 8 10 15 y- 6 7 9 18 Here, both variables are increasing. x- 15 10 8 5 y- 18 9 7 6 Here, both variables are decreasing. 2.Negative correlation When there is some flow of information in the opposite direction, it is called negative correlation. Example x- 5 8 10 15 y- 9 7 5 3 Here, x variable is increasing and y variable is decreasing. Some more examples of positive correlation are given below If temperature increases then AC selling will increase. When rainfall decreases then production will also decreases.

METHODS OF CORRELATION ANALYSIS The correlation between two ratio-scaled(numeric) variables is represented by the letter r which takes on values between -1 and +1 only. It is also known as the correlation of coefficient. There are various methods of finding correlation coefficient between two variables. They are1. 2. 3. 4. Scatter Diagram method Karl Pearsons Coefficient of Correlation method Spearmans Rank Correlation method Method of Least- squares

Now we will discussed about the Karl Pearsons Coefficient of Correlation method. To establish the relationship between variable there is formula given by Karl Pearson, r = (x-) (y-) / (x-) (y-) Here, and are mean. Now by using this formula, we will solve example, which is given below: Q. Calculate the Karl Pearson coefficient -

x y (x-) (y-) 15 25 -15 -8 18 25 -12 -8 21 27 -9 -6 24 27 -6 -6 27 31 -3 -2 30 33 0 0 36 35 6 2 39 41 9 8 42 41 12 8 48 45 18 12 =300/10 =330/10 =30 =33 By applying the Karl Pearsons formula, we getr = (x-) (y-) / (x-) (y-) r= 708 / (1080*480) r= 0.98

(x-) 225 144 81 36 9 0 36 81 144 324 1080

(y-) 64 64 36 36 4 0 4 64 64 144 480

(x-) (y-) 120 96 54 36 6 0 12 72 96 216 708

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