1. CORRELATION

2. Definition
• Tendency of two or more groups or series of
items to vary together directly or inversely.
• Analysis of association b/n two variables.
• Eg; price & supply

3. Different kinds of correlation
• Positive & negative
• Linear & non – linear
• Simple , multiple & partial

4. Positive & negative
• +ve - value of two variables moves in same
direction.
• Eg; price& supply
• -ve- value of two variables moves in opposite
direction.
• Eg; price& demand

5. Positive correlation

6. Negative correlation

7. Linear and non- linear
• Linear –const ratio of change exist b/n two
variables.
• Eg ;
X : 20 25 30 35 40
y : 30 37.5 45 52.5 60
ratio 2:3.
Non-linear-no const ratio

8. Simple, partial & multiple
• Simple – only two variables
• Multiple-degree of association b/n one
variable to others.
• Eg ;yield with both rainfall & temperature.
• Partial –relating 2 variables assuming one as
const.
• Eg –yield & rain fall (temperature const).