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QUANTITATIVE TOOL IN MANAGEMENT – CORRELATION, REGRESSION & OTHER TOOLS  DR. T.K. JAIN AFTERSCHO ☺ OL  CENTRE FOR SOCIAL ENTREPRENEURSHIP  WWW.AFTERSCHOOOL.TK   PGPSE : online programme for future entrepreneurs World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship OPEN FOR ALL FREE FOR ALL
WHAT IS CORRELATION?  Relation between two variables is called correlation.  Maximum possible value = +1 and minimum possible value = -1
Steps ... Calculate average find deviations from mean for each value multiply both the means find the average of the products of dx and dy – this is COVARIANCE devide this by the product of standard deviation of X and Y.
STEP 1 FIND MEAN  MEAN OF 1,2,3 IS 2, MEAN OF 2,3,4,5, IS 3.5
STEP 2 FIND STANDARD DEVIATION FIND DIFFERENCE FOR EACH ITEM  1-2 = -1 2-2=0 3-2=1 SO ON... FOR EACH VALUE FIND DIFFERNCE FROM MEAN, SQUARE THIS DIFFERENCE AND FIND THE AVERAGE OF THIS, THIS IS STANDARD DEVIATION.
STEP 3 FIND COVARIANCE MULTIPLY EACH DIFFERENCE (WITHOUT SQUARING)  -1 MULTIPLIED TO 1 = 1 THUS YOU GET PRODUCT OF DX (DIFFERENCE OF X FROM MEAN) AND DY. FIND AVERAGE OF THESE VALUES.
CALCULATION OF CORRELATION COVARIANCE OF X AND Y  / (PRODUCT OF STANDARD DEVIATION OF X AND Y)
EXAMPLE
CORRELATION STEPS  1. FIND MEAN 2. FIND STANDARD DEVIATION 3. FIND COVARIANCE 4. DIVIDE COVARIANCE BY PRODUCT OF STANDARD DEVIATIONS
REGRESSION IT SHOWS RELATION BETWEEN TWO VARIABLES – ONE DEPENDENT AND ONE INDEPENDENT  THE DEPENDENT VARIABLE CHANGES WITH INDEPENDENT VARIABLE Y = A + BX HERE REGRESSION ANALYSIS HELPS US IN FINDING VALUES OF A AND B A IS CALLED INTERCEPT B IS CALLED SLOPE
FORMULA FOR B (SLOPE) SLOPE CAN BE CALCULATED BY THE FOLLOWING FORMULA :  COVARIANCE / VARIANCE OF X  THUS IF WE CAN CALCULATE COVARIANCE AND VARIANCE, WE CAN ALSO CALCULATE B OR SLOPE A (INTERCEPT) CAN BE CALCULATED BY THE FORMULA : Y = A+BX
TIME SERIES ANALYIS  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
WHAT IS TREND?  ,[object Object]
WHAT IS AUTOCORRELATION ,[object Object]

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Quantitative%20 Tool%20 In%20 Management%20–%20 Correlation,%20 Regression%20&%20 Other%20 Tools.Odp 0

  • 1. QUANTITATIVE TOOL IN MANAGEMENT – CORRELATION, REGRESSION & OTHER TOOLS DR. T.K. JAIN AFTERSCHO ☺ OL CENTRE FOR SOCIAL ENTREPRENEURSHIP WWW.AFTERSCHOOOL.TK PGPSE : online programme for future entrepreneurs World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship OPEN FOR ALL FREE FOR ALL
  • 2. WHAT IS CORRELATION? Relation between two variables is called correlation. Maximum possible value = +1 and minimum possible value = -1
  • 3. Steps ... Calculate average find deviations from mean for each value multiply both the means find the average of the products of dx and dy – this is COVARIANCE devide this by the product of standard deviation of X and Y.
  • 4. STEP 1 FIND MEAN MEAN OF 1,2,3 IS 2, MEAN OF 2,3,4,5, IS 3.5
  • 5. STEP 2 FIND STANDARD DEVIATION FIND DIFFERENCE FOR EACH ITEM 1-2 = -1 2-2=0 3-2=1 SO ON... FOR EACH VALUE FIND DIFFERNCE FROM MEAN, SQUARE THIS DIFFERENCE AND FIND THE AVERAGE OF THIS, THIS IS STANDARD DEVIATION.
  • 6. STEP 3 FIND COVARIANCE MULTIPLY EACH DIFFERENCE (WITHOUT SQUARING) -1 MULTIPLIED TO 1 = 1 THUS YOU GET PRODUCT OF DX (DIFFERENCE OF X FROM MEAN) AND DY. FIND AVERAGE OF THESE VALUES.
  • 7. CALCULATION OF CORRELATION COVARIANCE OF X AND Y / (PRODUCT OF STANDARD DEVIATION OF X AND Y)
  • 9. CORRELATION STEPS 1. FIND MEAN 2. FIND STANDARD DEVIATION 3. FIND COVARIANCE 4. DIVIDE COVARIANCE BY PRODUCT OF STANDARD DEVIATIONS
  • 10. REGRESSION IT SHOWS RELATION BETWEEN TWO VARIABLES – ONE DEPENDENT AND ONE INDEPENDENT THE DEPENDENT VARIABLE CHANGES WITH INDEPENDENT VARIABLE Y = A + BX HERE REGRESSION ANALYSIS HELPS US IN FINDING VALUES OF A AND B A IS CALLED INTERCEPT B IS CALLED SLOPE
  • 11. FORMULA FOR B (SLOPE) SLOPE CAN BE CALCULATED BY THE FOLLOWING FORMULA : COVARIANCE / VARIANCE OF X THUS IF WE CAN CALCULATE COVARIANCE AND VARIANCE, WE CAN ALSO CALCULATE B OR SLOPE A (INTERCEPT) CAN BE CALCULATED BY THE FORMULA : Y = A+BX
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