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CH Simple Linear Correlation ppt0001

This document discusses simple linear correlation. It defines correlation as how quantities vary together, with movements in one variable tending to correspond to movements in the other. There are different types of correlation, including positive/negative, simple/partial/multiple, and linear/non-linear. Simple correlation involves two variables, partial removes the effect of a third variable, and multiple studies three or more variables simultaneously. Linear correlation means a constant ratio of change between variables, while non-linear means the ratio is not constant. Methods to study correlation are scatter diagrams, Pearson's coefficient, and rank correlation. Covariance measures how much two variables change together.

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55 views12 pages

CH Simple Linear Correlation ppt0001

This document discusses simple linear correlation. It defines correlation as how quantities vary together, with movements in one variable tending to correspond to movements in the other. There are different types of correlation, including positive/negative, simple/partial/multiple, and linear/non-linear. Simple correlation involves two variables, partial removes the effect of a third variable, and multiple studies three or more variables simultaneously. Linear correlation means a constant ratio of change between variables, while non-linear means the ratio is not constant. Methods to study correlation are scatter diagrams, Pearson's coefficient, and rank correlation. Covariance measures how much two variables change together.

Uploaded by

Justice Dhliwayo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Ch – 10 SIMPLE LINEAR CORRELATION

SIMPLE LINEAR CORRELATION


DEFINITION OF CORRELATION
• “If two or more quantities vary in sympathy so
that movements in one tend to be
accompanied by corresponding movements in
other(s) then they are said to be correlated.”
Or
• “Correlation is an analysis of co-variation
between two or more variables.”
TYPES OF CORRELATION
• The following are different types of
correlation:
• Positive and Negative Correlation
• Simple, Partial and Multiple Correlation
• Linear and Non-linear Correlation
Positive and Negative Correlation

• The correlation between two variables is said


to be positive or direct if an increase (or a
decrease) in one variable corresponds to an
increase (or a decrease) in the other.
• The correlation between two variables is said
to be negative or inverse if an increase (or a
decrease) corresponds to a decrease (or an
increase) in the other.
Simple, Partial and Multiple Correlation
• Simple Correlation: It involves the study of only two variables. For
example, when we study the correlation between the price and
demand of a product, it is a problem of simple correlation.
• Partial Correlation: It involves the study of three or more variables,
but considers only two variables to be influencing each other. For
example, if we consider three variables, namely yield of wheat,
amount of rainfall and amount of fertilizers and limit our correlation
analysis to yield and rainfall, with the effect of fertilizers removed, it
becomes a problem relating to partial correlation only.
• Multiple Correlation: It involves the study of three or more
variables simultaneously. For example, if we study the relationship
between the yield of wheat per acre and both amount of rainfall
and the amount of fertilizers used, it becomes a problem relating to
multiple correlation.
Linear and Non-linear Correlation
• Linear Correlation: The correlation between two
variables is said to be linear if the amount of
change in one variable tends to bear a constant
ratio to the amount of change in other variable.
• Non-linear (or Curvilinear): The correlation
between two variables is said to be non-linear or
curvilinear if the amount of change in one
variable does not bear a constant ratio to the
amount of change in other variable.
METHODS OF STUDYING CORRELATION

• Scatter Diagram Method


• Karl Pearson’s Coefficient of
Correlation, and
• Rank Correlation Method
Scatter Diagram Method
• A scatter diagram of the data helps in having a
visual idea about the nature of association
between two variables. If the points cluster along
a straight line, the association between two
variables is linear. Further, if the points cluster
along a curve, the corresponding association is
non-linear or curvilinear. Finally, if the points
neither cluster along a straight line nor along a
curve, there is absence of any association
between the variables.
Covariance
• The covariance between X and Y, is denoted by Cov (X, Y)
Thankyou

Lecture sourced from


•Book “Business Mathematics and Statistics” by R. S. Bhardwaj
•Book “Business Mathematics and Statistics” by Dr. J. K. Thukral

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