Paper 4: Fundamentals of Business Mathematics & Statistic

6.14 I FUNDAMENTALS OF BUSINESS MATHEMATICS AND STATISTICS

Correlation and Regression

• Mean of X =20


• Variance of Y = 16
  Solution:
  Cov. (X,Y) = -15

C.V.x =meanσx x100

xx100 25

20

=σ =

σ =x 5

(σ =^2 y) 16(given)

σ =y 4

x y

r=cov.(X,Y)

σ σ

15

5x4

=−

= – 0.75

Example 10 :

From the following data, compute coefficient of correlation (r) between X and Y:

X series Y series

Arithmetic Mean 25 18

Square of Deviations from A.M. 136 138

Summation of products of deviations of X and Y series from

their respective means 122

Number of pairs of values 15

Solution:

2 2

r xy

x y

= ∑

∑ ∑

r^122

136x138

=

r^122

=136.9

= 0.891