Transcription of Correlation Ch.-7 (Ver 8)
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Correlation Ch.-7 (Ver 8)
As the summer heat rises, hillstations, are crowded with more andmore visitors. Ice-cream sales becomemore brisk. Thus, the temperature isrelated to number of visitors and saleof ice-creams. Similarly, as the supplyof tomatoes increases in your localmandi, its price drops. When the localharvest starts reaching the market,the price of tomatoes drops from aprincely Rs 40 per kg to Rs 4 per kg oreven less. Thus supply is related toprice. Correlation analysis is a meansfor examining such relationshipssystematically. It deals with questionssuch as: Is there any relationship betweentwo variables?Correlation71. INTRODUCTIONIn previous chapters you have learnthow to construct summary measuresout of a mass of data and changesamong similar variables. Now you willlearn how to examine the relationshipbetween two this chapter shouldenable you to: understand the meaning of theterm Correlation ; understand the nature ofrelationship between twovariables; calculate the different measuresof Correlation ; analyse the degree and directionof the FOR ECONOMICS If the value of one variablechanges, does the value of theother also change?
Karl Pearson’s Coefficient of Correlation This is also known as product moment correlation and simple correlation coefficient. It gives a pr ecise numerical value of the degree of linear relationship between two variables X and Y. The linear r elationship may be given by Y = a + bX This type of relation may be described by a straight line. The
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