The point biserial correlation coefficient is used to correlate a dichotomous variable (with two possible outcomes, like correct/incorrect) with a continuous variable (like a test score). It measures the correlation between a nominal/dichotomous variable and an interval/ratio variable. The point biserial formula calculates the mean score on a test for people who got an item correct versus incorrect, along with the standard deviation and item difficulty. The document provides an example of calculating the point biserial correlation coefficient using scores from 20 students on a math test, where their sex is the dichotomous variable and test score is the continuous variable.