In case on linear correlation points of correlation

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Unformatted text preview: he change in one variable is not accompanied by a constant ratio of change in the other variable. In case of non-linear correlation, points of correlation plotted on a graph do not give a straight line. It is called curvilinear correlation because graph of such correlation results in a curve. Simple, Partial and Multiple Correlations Simple correlation studies relationship between two variables only. For instance, correlation between price and demand is simple as only two variables are studied in this case. Multiple correlation studies relationship of one variable with many variables. For instance, correlation of agricultural production with rainfall, fertilizer use and seed quality is a multiple correlation. Partial correlation studies the relationship of a variable with one of the many variables with which it is related. For instance, seed quality, temperature and rainfall are three variables, which determine yield of a crop. In this case, yield and rainfall is a partial correlation. Utility of Correlation Study of correlation is of immense practical use in business and economics. Correlation analysis enables us to measure the magnitude of relationship existing between variables under study. Once we establish correlation, we can estimate the value of one variable on the basis of the other. This is done with the help of regression equations. Sikkim Manipal University Page No. 204 Research Methodology Unit 11 The correlation study is useful for formulation of economic policies. In economics, we are interested in finding the important dependant variables on the basis of independent variable. Correlation study helps us to make relatively more dependable forecasts Methods of Studying Correlation Following methods are used in the study of correlation: Scatter diagram Karl Pearson method of Correlation Spearman’s Rank correlation method Concurrent Deviation method Scatter Diagram This is a graphical method of studying correlation between two variables. In scatter diagram, one variable is measured on the x-axis and the other is measured on the y-axis of the graph. Each pair of values is plotted on the grap...
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