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QTDM Unit-2 Correlation & Regression Analysis

This document discusses correlation and regression analysis techniques. It defines correlation, the coefficient of correlation, and how to interpret different correlation values. It also defines regression analysis and how to find the regression line equation and use it to estimate dependent variable values. Several examples are provided and steps shown on how to calculate correlation, draw scatter plots, find the regression line and use it to estimate values.

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Aishwarya Manish
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57 views

QTDM Unit-2 Correlation & Regression Analysis

This document discusses correlation and regression analysis techniques. It defines correlation, the coefficient of correlation, and how to interpret different correlation values. It also defines regression analysis and how to find the regression line equation and use it to estimate dependent variable values. Several examples are provided and steps shown on how to calculate correlation, draw scatter plots, find the regression line and use it to estimate values.

Uploaded by

Aishwarya Manish
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Correlation & Regression

Analysis
Correlation Analysis
• The analysis of ‘Association’ or ‘Relationship’
between two variables.
• Study of how Y would behave when X changes
• Will Y increase or decrease or remain
unchanged when X increases?
• Correlation is not Causation
• Scatter diagram is used to graphically
represent Correlation.
Coefficient of Correlation (r)
• Karl Pearson’s Correlation Coefficient (r)
• r can take a value only between -1 to +1.
• r > 0 indicates positive correlation between X
and Y
• r < 0 indicates negative correlation between X
and Y
• r = 0 indicates No correlation between X and Y
Coefficient of Correlation (r)
• r value indicates direction and strength of
Correlation.
• 0 < r < 0.5 indicates a Weak Positive
Correlation
• 0.5 < r < 1 indicates a Strong Positive
Correlation
• r = 1 indicates a Perfect Positive Correlation
Coefficient of Correlation (r)
• r = 0 indicates No correlation
• -0.5 < r < 0 indicates A Weak negative
correlation
• -1 < r < -0.5 indicates A Strong negative
correlation
• r = -1 indicates A Perfect Negative Correlation
Example-1
The following data gives information on GDP
growth rate (X) (%) and Sales growth rate in
automobiles (Y) (%)
X 5.6 6.7 6.2 5.8 6.0 7.0 6.5 7.2
Y 6.8 7.8 7.5 7.0 6.8 7.9 7.3 7.6

Draw scatter diagram, calculate r and interpret.


Example-2
The following data pertains to Sales calls made
by Sales Team and Customer Orders received
Sales Calls 62 82 57 102 113 127 98 130
Customer 8 9 8 9 6 9 8 10
Orders

Draw scatter diagram, calculate r and interpret.


Example-3
The Plant Manager of a manufacturing firm wants to
understand the relationship between Training and
Defective %.
X: Average Training hours (per employee per year)
Y: Defective %
X 16.5 17.8 15.2 14.0 21.7 20.5 20.3 18.7
Y 3.8 3.4 4.0 4.5 2.4 2.8 3.0 3.6

Draw scatter diagram, calculate r and interpret.


Regression Analysis
• Relationship in an equation form between a
Dependent variable and an Independent
variable.
• Simple linear regression
• Used to estimate / predict the value of
Dependent variable when value of
Independent variable is known.
• Used as a Forecasting tool.
Example-4
X 102.5 100 98.7 104.5 106 101.8 98.2 109 111

Y 32 34 41.2 38 34.5 37.4 35 34.5 39.6

Draw scatter diagram, calculate r and interpret.


Also find the regression line equation,
coefficient of regression, coefficient of
determination & interpret.
Estimate Y for X = 107
Example-5
X 15 18 19 17 12 21 24 25 27

Y 3.7 3.9 4.2 3.8 2.9 5.0 5.3 5.5 5.5

Draw scatter diagram, calculate r and interpret.


Also find the regression line equation,
coefficient of regression, coefficient of
determination & interpret.
Estimate Y for X = 30
Example-6
X 7.8 9.0 8.5 7.5 8.3 10.1 9.7 7.2 8.4 9.0 9.3

Y 5.9 4.7 5.0 6.5 5.4 4.1 4.4 6.7 5.5 4.2 4.0

X : Cost on preventive healthcare (% of GDP per annum)


Y: No. of patient admissions in public hospitals (mn)
Draw scatter diagram, calculate r and interpret.
Also find the regression line equation, coefficient of
regression, coefficient of determination & interpret.
Estimate No. of patient admissions if 12.5% of GDP is
spent on preventive healthcare.

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