CORRELATION

                                                          CORRELATION

Correlation is the statistical tool which is used to know the relationship between two or more variables i.e., the degree to which the variables are associated with each other. In simpler words, it measures the closeness of the relationship. For example, price and supply, demand and supply, income and expenditure are correlated.

TYPES OF CORRELATION

There are mainly  four types of correlation. They are,

1.      Positive correlation

2.      Negative correlation

3.      Zero correlation

4.      Perfect correlation

 Positive correlation

Positive correlation means that as one data set increases, the other data set increases as well. For example, price of a goods and demand, hot weather and cold drink consumptions, etc.

The line corresponding to the scatter plot is an increasing line.

                        

Negative correlation

Negative correlation means that as one data set increases, the other decreases. For example, alcohol consumption and lifeline, smart phones usages and battery lifeline, etc.

The line corresponding to the scatter plot is a decreasing line.

Zero correlation

Zero correlation means no correlation, i.e., the two sets of data are not related at all. In other words, this means that one set of data does not increase or decrease with the other. For example, HR recruits and temperature, paper production and beverages, etc. No correlation occurs when there is no linear dependency between the variables.

            

Perfect correlation

If there is any change in the value of one variable, the value of the other variable is changed in a fixed proportion. The correlation between them is said to be a perfect correlation. It is indicated numerically as +1 and -1.

Perfect correlation occurs when there is a functional dependency between the variables. In this case all the points are in a straight line.

Perfect Positive Correlation

If the values of both the variables move in the same direction with a fixed proportion is called a perfect positive correlation. It is indicated numerically as +1.

Perfect Negative Correlation

If the values of both the variables move in opposite directions with a fixed proportion is called a perfect negative correlation. It is indicated numerically as -1.