Computation of Standard Deviation in case of Continuous Series

In continuous series, the class-interval and frequencies are given. The following methods are
used to compute standard deviation in this case:
1. Actual mean method.
Here also the deviations can be taken from Actual Mean.

∑ f x2
σ= √ ∑f

Where x = X - X̅
Where x2 is the square of deviations from actual mean
(X̅), f denotes corresponding frequency.
2. Assumed Mean Method.

∑ f d 2 Σfd 2
σ=
√ ∑f ( )
−
∑f

Where d = m – A, i.e., deviations taken from the assumed mean.

3. Step deviation method
∑ f D2 ΣfD 2
×C
σ=
√ ∑f
−( )
∑f
m− A
Where D = C , i.e., deviations taken from the assumed mean
divided by the class interval and C = Class Interval/Common
Factor (if the class intervals are unequal, use Common factor), m
is the mid value of class interval.
Profit (X) No of Companies (f)

0-10 1
10-20 4
20-30 17
30-40 45
40-50 26
50-60 5
60-70 2

(i) Actual Mean Method

(ii) Assumed Mean Method
(iii) Step-Deviation Method

Solution:

1. Applying Actual Mean Method

2
σ = ∑f x
√ ∑f
Table: Calculation of standard deviation

Profit No of Companies m mf x = m- X̅ fx2

(X) (f)

0-10 1 5 5 -31.4 985.96

10-20 4 15 60 -21.4 1831.84

20-30 17 25 425 -11.4 2209.32

30-40 45 35 1575 -1.4 88.20

40-50 26 45 1170 8.6 1922.96

50-60 5 55 275 18.6 1729.80

60-70 2 65 130 28.6 1635.92

N= ∑ f =100 3640 ∑ f x2¿ 10404

∑ fm 3640
X̅= N
=
100
= 36.4

2
10404
σ = ∑f x =
√ ∑f √
= √ 104.04 = 10.2
100

Applying Assumed Mean Method:

∑ f d 2 Σfd 2
σ=
√ ∑f ( )
−
∑f

Where d = X – A, i.e., deviations taken from the assumed mean.

Let A = 45
Profit No of Companies m d=m-A fd f(d)2
(X) (f)

0-10 1 5 -40 -40 1600

10-20 4 15 -30 -120 3600

20-30 17 25 -20 -340 6800

30-40 45 35 -10 -450 4500

40-50 26 45 0 0 0

50-60 5 55 10 50 500

60-70 2 65 20 40 800

N= ∑ f =100 ∑ fd = -860 ∑ f d2¿ 17800

∑ f d 2 Σfd 2
σ=
√ ∑f ( )
−
∑f
2
17800 −860
σ=
√
100
−
100 ( ) ¿ √ 178−(−8.6 )
2
= √ 178−73.96

σ = √ 104.04

σ = 10.2
σ
Coefficient of σ =¿ Mean = 10.2/45 =

Coefficient of variation = σ x 100 = 10.2 x 100 =

Applying Step Deviation Method:

∑ f D2 ΣfD 2
σ=
√
∑f
−
∑f ( ) ×C
Here C = 10
Let A = 25

Profit No of Companies m m− A fD f (D)2

D= C
(X) (f)

0-10 1 5 -2 -2 4

10-20 4 15 -1 -4 4

20-30 17 25 0 0 0

30-40 45 35 1 45 45

40-50 26 45 2 52 104

50-60 5 55 3 15 45
60-70 2 65 4 8 32

N= ∑ f =100 ∑ fD = 114 ∑ f D2¿ 234

∑ f D2 ΣfD 2
σ=
√
∑f
−
∑f ( ) ×C

2
234 114
σ=
√ ( )
−
100 100
× 10

σ =√ 2.34−( 1.14 )
2
× 10
σ =√ 2.34−1.299 × 10

= √ 1.041 × 10
= 1.02 × 10 = 10.2
Example 10: A study of 100 companies gives the following information
Profit (in Rs crores): 0-10 10-20 20-30 30-40 40-50 50-60
No. of Companies: 10 20 30 50 40 30
Calculate the standard deviation of the profit earned.