Quantitative Methods 1

Payal Goel

KARL PEARSON'S COEFFICIENT OF CORRELATION

 Quantitative Methods 2
Payal Goel

S U BJEC T A GE X GLU C OS E LEVEL Y

1 43 99
2 21 65
3 25 79
4 42 75
5 57 87
6 59 81

S U BJEC T A GE X GLU C OS E LEVEL Y XY X2 Y2

1 43 99 4257 1849 9801
2 21 65 1365 441 4225
3 25 79 1975 625 6241
4 42 75 3150 1764 5625
5 57 87 4959 3249 7569
6 59 81 4779 3481 6561

247 486 20485 11409 40022

6(20,485) (247 486) / [[[6(11,409) (2472)] [6(40,022) 4862]]]

=0.5298
Quantitative Methods 3
Payal Goel
Quantitative Methods 4
Payal Goel
 Quantitative Methods 5
Payal Goel

Calculate Karl Pearson's Coefficient of Correlation

Example: Calculate Karl Pearson's coefficient of correlation from the advertisement cost
and sales as per the data given below:
Advertisement 39 65 62 90 82 75 25 98 36 78
Cost (in000$)
Sales (in 47 53 58 86 62 68 60 91 51 84
lakh$)
(C.A., Inter, 1975)
Solution: Calculation of Coefficient of Correlation
Advt. Dev. Square Sales (in Dev. From Square of Product
Cost From of Dev. Lakh $) Mean (65) Dev. of
(000 Mean Deviation
$) (65)
X x X2 Y Y Y2 Xy
39 26 676 47 19 361 +494
65 +0 0 53 13 169 0
62 3 9 58 8 64 +24
90 +25 625 86 +20 400 +500
82 +17 289 62 4 16 68
75 +10 100 68 +2 4 + 20
25 40 1600 60 6 36 +240
98 +33 1089 91 +25 625 +825
36 29 841 51 15 225 +435
78 +13 169 84 +18 324 +234
2 2
X = x = x = Y= y = 2,224 xy =
650 0 5,398 660 0 +2.704
n=10 n=10
Mean of series (X ) = (X)/n = 650/10 = 65
Mean of series (Y) = (Y)/n=660/10 = 66
r = (xy)/((n&(x2)/n) ((y2)/n)) = (+ 2704)/((10&5398/10) (2224/10))
= (+ 2704)/(1023.23314.913)= (+ 2704)/3464.737 = 0.7804
Quantitative Methods 6
Payal Goel