BUSINESS STATISTICS

RAGUL.K
CORRELATION 62444
B.COM (C.S)
1.Define correlation.

Correlation is a statistical measure that describes the extent to which

two variables are linearly related. It's a common tool for describing

simple relationships without making a statement about cause and

effect.
 2.Define positive correlation.

 A positive correlation is a relationship between

two variables that move in the same direction.

This means that as one variable increases, so

does the other, and conversely, when one

variable decreases, so does the other.

3.Define negative correlation.

 A negative correlation is a

relationship between two variables

that move in opposite directions.

In other words, when variable A

increases, variable B decreases.

4.Define partial correlation.

 In statistics and probability theory, partial correlation measures the

degree of association between two random variables. It does so

while removing the effect of a set of controlling random variables.

5.Define simple correlation.

Simple correlation is a statistical measure that determines the strength and

direction of the relationship between two variables. It's also called linear

correlation because it involves two continuous and numeric variables that have a

linear relationship.
6.Define multiple correlation.

 Multiple correlation is the relationship between more than two variables. The

correlation is simple when only two variables are studied. When three or

more variables are studied, the correlation is either multiple or partial.

7.Define zero or no correlation.

 Zero correlation means that there is no linear relationship between two

variables. However, this does not mean that there is no relationship between

the variables at all.

8.Explain scatter diagram.

 A scatter diagram is a two-dimensional graph that shows the relationship

between two variables. It's also known as a scatter plot, scatter graph, or

correlation chart

 In this method we plot every pair of value in the form of dot on a graph and

we get as many as dot and the no. of observations

9.Write the properties of correlation.

 The correlation co.efficient lies between -1 and +1.

 The correlation co-efficient is independent of the change of origin and scale.

 The co-efficient of correlation is the geometrical mean of two regression co-

efficient r

r = 𝒃𝒙𝒚 × 𝒃𝒚𝒙
10.What are the applications (uses)of
correlation ?

 Correlation is a statistical technique that measures the relationship between

two variables. It has many applications, including:

 Predictive modeling, Quality control, Medical research, Risk management,

Financial analysis, Decision making.

 Correlation can be used to determine the relationship between data sets in

business. For example, researchers use correlation analysis to analyze

quantitative data collected through surveys and live polls.

11.What are the methods of studying
correlation.

 The three different methods of measuring correlation between two variables

are:

Scatter diagram

Karl Pearson's coefficient

Spearman's Rank Correlation Coefficient

12.What is rank correlation ?

 In statistics, rank correlation is a method for measuring the relationship

between rankings of different variables. It can also be used to measure the

relationship between different rankings of the same variable.

13.write the formula for rank correlation in
case of repeated value

𝟏
ρ=1-(𝟔{𝜮𝑫𝟐 + 𝑴𝟑 − 𝑴 + ⋯ /𝒏𝟑-n
𝟏𝟐
14.Define regression.

 It is a mathematical measure of average relationship between two or more

variables.

 It is a statistical tool used in prediction of value of unknown variable from

known variable.
 15.Write the applications of regression
analysis

 Regression analysis is a versatile statistical technique with numerous

applications across various fields. Some of the key applications include:

Economics and Finance:

Marketing:
Healthcare
Social Sciences:
Environmental Science:
Human Resources:
 16.Write the properties of regression
analysis.
 Linearity:

 The relationship between the dependent variable and the independent variable(s) is
assumed to be linear. This means that changes in the independent variable(s) are
associated with constant proportional changes in the dependent variable.

 Independence of Errors:

The errors (residuals) in the regression model should be independent, meaning that the
error associated with one observation should not predict the error for another observation.
This assumption is crucial for the validity of statistical Inferences.
 Homoscedasticity:
The variance of the errors should be constant across all levels of the
independent variable(s). In simpler terms, the spread of residuals should
remain roughly the same as the values of the independent variable(s)
change.
➢ Normality of Residuals:
The residuals should ideally follow a normal distribution. While this
assumption is not always strictly necessary, violations may affect the
accuracy of statistical tests and confidence intervals.
17.What do you mean by time series ?

 A time series is a data set that tracks a sample over time. In particular, a time

series allows one to see what factors influence certain variables from period

to period. Time series analysis can be useful to see how a given asset, security,

or economic variable changes over time.

18.What are the components of time
series ?

Secular trend

Seasonal trend
Components
of time series Irregular
components
Cyclical
components
19.Write down the merits of least
squares.

 Simplicity: It is very easy to explain and to understand

 Applicability: There are hardly any applications where least squares doesn’t

make sense

 Theoretical Underpinning: It is the maximum-likelihood solution and, if the

Gauss-Markov conditions apply, the best linear unbiased estimator

20.What do you mean by index
numbers ?

 An index number is a statistical device for measuring changes in the

magnitude of a group of related variables. It represents the general trend of

diverging ratios, from which it is calculated. It is a measure of the average

change in a group of related variables over two different situations.

21.What is cost of living index ?

 A cost-of-living index is a theoretical price index that measures the relative

cost of living over time or regions. It's a metric that assesses the variation in

the cost of living at a place with time.

 A cost-of-living index compares the expenses from one town or geographic

region to another. It includes food, shelter, transportation, energy, clothing,

healthcare, and childcare

22.Write the uses of index numbers.
 Index numbers have various applications across different fields, providing a
way to measure and analyze changes in different variables over time. Here
are some common uses of index numbers:

 Inflation Measurement:
 Economic Indicators:
 Financial Markets:
 Cost of Living Adjustments:
 Wage Adjustments:
 International Trade:
 Education
23.Define value index numbers.

 A value index number is a ratio that measures the change in a nominal value

relative to its value in the base year. It's the ratio of the aggregate value for a

particular period with that of the aggregate value that is found in the base

period.
24.What are the types of index
numbers.

 One such very important tool are index numbers. They help reveal the trends

and tendencies of the economy and also help in the formulation of economic

policies and laws. There are broadly three types of index numbers – price

index numbers, value index numbers, and quantity index numbers.

25.Write down the formula for
Laspeyres index number method.

IL = ∑PiQ0 / ∑P0Q0(100)

 In this formula, the following apply:

 Q0: is the quantity in the base year
 P0: is the price in the base year
 Pi: is the price for the year of interest
26. Write down the formula for
Paasche's index number method.

Paasche Price Index = Σ (Pi, t) x (Qi, t) / Σ (Pi, 0) × (Qi, t) × 100

27.Write down the formula for Fishers
ideal index number method.
28.Write down the formula for Dorbish
& Bowley's index number method.
29.Write down the formula for Marshall-
Edgeworth index number method.
30.Write down the formula for arithmetic
mean price index number method.

AM=n∑Pt×100
 Where:
• AM is the arithmetic mean price index.
• ∑Pt​ is the sum of the prices of the selected items in the current period (t).
31.Write down the formula for geometric
mean price index number method.

GM=(∏i=1n​(Pi0​Pit​​))n1​×100
• GM is the geometric mean price index.
• ∏i=1n​ denotes the product of the ratios for each item from the base period
(0) to the current period (t).
• Pit​ is the price of the ith item in the current period.
• Pi0​ is the price of the ith item in the base period.
• n is the number of items in the selected basket of goods
32.Define time reversal test.

 Time series analysis is a statistical method used to analyze data collected over a
period of time. In time series analysis, the order in which data points occur is
crucial, and the analysis may involve identifying trends, seasonal patterns, or
other temporal dependencies.

 In some statistical models, there might be an implicit assumption that the

relationships observed in the data hold consistently over time. If this assumption
is violated, it could indicate issues such as a lack of time stability or changing
dynamics in the underlying processes.
33.Define factor reversal test.

 The factor reversal test requires that multiplying a price index and a volume

index of the same type should be equal to the proportionate change in the

current values. For example, the “Fisher Ideal” price and volume indexes

satisfy this test.

34.What is sampling ?

 A sample is a subset of individuals from a larger population. Sampling means selecting the

group that you will actually collect data from in your research. For example, if you are

researching the opinions of students in your university, you could survey a sample of 100

students.

 In statistics, sampling allows you to test a hypothesis about the characteristics of a

population.
35.What is sampling error ?

 Sampling error is a statistical error that occurs when a sample does not

represent the entire population. It's the difference between a sample statistic

and the actual value of the parameter

36.What is cluster sampling error ?

 Cluster sampling is a sampling method that involves selecting larger clusters,

then smaller clusters within those, and sometimes even smaller clusters

within those. It is often used when the population is organized hierarchically.

37.Define systematic sampling method.

 Systematic sampling is a probability sampling method that involves selecting members

from a larger population based on a random starting point and a fixed, periodic interval.

The interval, called the sampling interval, is calculated by dividing the population size by

the desired sample size.

 For example, a researcher might select every 15th person on a list of the population. If the

population is in a random order, this can mimic the benefits of simple random sampling
38.What is stratified sampling?

 Stratified sampling is a statistical method that involves dividing a population

into smaller groups, or strata, based on common characteristics. The

elements within each stratum are similar to one another in terms of certain

survey-relevant characteristics.
39.What are the methods of sampling

Simple Random Sampling:

Stratified Random Sampling:

Systematic Sampling:
40.State the method of random
sampling.

 Simple random sampling

 Systematic sampling

 Stratified sampling

 Cluster sampling
41.State the method of non random
sampling.

1. Convenience Sampling:
2. Purposive (Judgmental) Sampling:
3. Quota Sampling:
4. Snowball Sampling:
5. Volunteer Sampling:
42.Define biased errors.

 Biased errors, in the context of statistical analysis and research, refer to systematic

mistakes or inaccuracies in the data collection or analysis process that consistently

skew the results in a particular direction. These errors can lead to a deviation of the

observed values from the true values in a predictable and consistent manner.
43.Define unbiased errors.

 In the context of statistical analysis and research, unbiased errors refer to

errors that do not systematically skew the results in a particular direction. An

unbiased estimator or measurement is one for which, on average, the estimate

converges to the true value as the sample size increases. In other words, there

is no systematic tendency for the estimate to be consistently too high or too

low.
44.Write the merits of sampling.

 Reduce cost.
 Greater speed.
 Greater scope.
 Greater accuracy.
 Organization of convenience.
 Intensive and exhaustive data.
45.Write the limitation of sampling.

 The limitations of sampling include the possibility of sampling error, selection

bias, non-response bias, under coverage, issues with the sampling frame,

difficulties in defining the population, limited precision, challenges in studying

rare subgroups, issues with generalization, and potential errors in the sampling

frame. While sampling offers advantages, careful consideration and appropriate

methods are needed to address these limitations and ensure the validity of

research findings