1.

Pearson’s Product Moment Correlation Coefficient

Pearson’s Product Moment Correlation Coefficient is used to measure the strength of the
relationship between two variables that are quantitative in nature. It is normally denoted by r. The
sign (- or +) for r identifies the kind of relationship between the two quantitative variables and the
magnitude of r describes the strength of relationship. The formula for the Pearson’s Correlation
Coefficient, r is as follows:

where r = correlation coefficient

n = number of observations
∑x = sum of the x value , ∑y = sum of the y values
∑xy = sum of the product of x and y
∑x2 = sum of the square values of x
∑y2 = sum of the square values of y

2. Coefficient of Determination

The coefficient of determination is the ratio of the explained variation to the total variation. It is
normally denoted by r2. The term r2 is expressed as a percentage.

3. REGRESSION LINE
One of the methods to find a best fitting line of the data is the method of least squares. A
regression line with a positive slope indicates that there is a direct relationship between the
two variables. This means that if x increases, y will increase as well and vice versa.
A negative slope indicates an inverse relationship between the two variables. This means
that if x increases, y will decrease and if x decreases, y will increase. Thus, x and y are always
moving in opposite directions. If the slope is zero, then we say that the two variables are not
related.

The values of a and b in the regression line y = a + bx can be calculated using the following
formula: