Data and Decisions

Case 1
Corelation analysis
The strength, relationship and direction among or between the coexisting variables in
an analysis is called corelation.

Salary per
month (in
Years of thousands,
Experience in rupees)
2 15
5 12
6 48
8 19
9 64
6 21
4 22
1 9

Dependent variable (y) – salary per month

Independent variable (x) – years of experience
Observations – 8
Corelation (r) – 0.678618101
Interpretation – there exists medium positive corelation between salary per month
(y) of the employees and their years of experience (y).
Excel analysis -
salary per
month (in
years of thousands.
experience In rupees)
years of experience 1
salary per month (in thousands. In
rupees) 0.678618101 1
Manual calculation –
𝒏 ∗ 𝜮𝒙𝒚 − 𝜮𝒙 ∗ 𝜮𝒚
𝒓=
√𝒏 ∗ 𝜮𝒙𝟐 − (𝜮𝒙)𝟐 ∗ √𝒏 ∗ ∑𝒚𝟐 − (∑𝒚)𝟐

X Y X2 Y2 XY
2 15 4 225 30
5 12 25 144 60
6 48 36 2304 288
8 19 64 361 152
9 64 81 4096 576
6 21 36 441 126
4 22 16 484 88
1 9 1 81 9

∑ 41 210 263 8136 1329

8 ∗ 1329 − 41 ∗ 210
𝑟=
√8 ∗ 263 − (41)2 ∗ √8 ∗ 8136 − (210)2
10632 − 8610
𝑟=
√2104 − 1681 ∗ √65088 − 44100

2022
𝑟=
√423 ∗ √20988
2022
𝑟=
20.56 ∗ 144.87
2022
𝑟=
2978.5
𝒓 = 𝟎. 𝟔𝟕𝟖𝟖𝟔𝟓𝟐.

This calculation proves that corelation is medium and positive between dependent and
independent variables.

Mohammed Yaseen Qureshi

PES1202202920
MBA ‘C’ Section