*BCom 1st Year Correlation Long Question Answer Notes** :-*

**Q.1 What is correlation? What are the types of
correlation? Discuss the degree of correlation.**

**Or**

**Explain the meaning and significance of the
concept of correlation. Give the general rules for interpreting its
coefficient.**

**Or **

**What is meant by correlation? Does it always
signify the cause and effect relationship between the two variables? Explain with illustration**.

**Ans. Correlation: **The term correlation can be defined as the degree on ariables. Two variables are said to be correlated when the change in the value of one variable leads to the change in the values of the other words, two variables of the same group are said to be correlated when and increase in the value of one variables leads to an increase in the value of the other or and increase in the value of one variable leads to the decrease in the value of the other or the decrease in the value of one variable leads to the decrease in the value of the other or decrease in the value of one variable leads to an increase in the value of the other variables.

**Definitions**

Following are the definitions of correlation:

Correlation analysis attempts to determine the degree of relationship between variablesâ€™.

When the relationship is of a quantitative nature, the appropriate statistical to and measuring the relationship and expressing it in a brief formula is known as correlation.

Correlation means that between two series or groups of data there exists some causal Connectionâ€™.

**Types of
Correlation**

Types of correlation are as follows :

**1. Positive
and Negative correlations:** When an increase in the value of one variable leads to an increase in
the value of the other variable, and when the decrease in the value of one
variable leads to the decrease in the value of the other variable, the
correlation between the two variables is said to be positive correlation. For
example, an increase in the quantity of supply of a product due to an increase
in its price or the decrease in the quantity of supply of a product due to the
decrease in its price shows positive correlation.

When an increase in the value of one variable leads to the decrease in the value of other variable and when the decrease in the value of one variable leads to an increase in the value of the other variable, the correlation between the two variables is said to be negative correlation. For example, an increase in the demand for a product due to the decrease in its price or the decrease in the demand for a product due to an increase in its price shows negative correlation.

**2. Linear
and Non-linear Correlations: **When a unit change in the value of one variable leads to a constant
change in the value of another variable, the correlation between the two
variables is called linear correlation. For example, if an increase in the
price of a commodity by 20% leads to the decrease in its demand by 15% every
time, it is said that the price and demand have a linear correlation.

When a unit change in the value of one variable leads to a fluctuating change in the value of the other variable, the correlation between the variables is called as non-linear correlation. For example, if an other variable, the correlation between the variables is called as non-linear correlation For example, if and increase in the price of a commodity by 20% leads to the decrease in its demand ranging from 5% 10% and 15% it is said that the price and demand have a non-linear correlation or curvy-linear correlation.

**3. Simple,
Multiple and Partial Correlations:** When we study the correlation between two
variables, this correlation is said to be simple correlation. For example, the
study of correlation between price and demand.

When we study the correlation among more than two variables, this correlation is said to be multiple correlation. For example, the study of correlation between price of a product, demand for a product and income of consumers.

When we study the correlation among more than two variables, but in that study we only consider the inter-relationship between two variables and the third variable is assumed to be constant, this correlation is said to be partial correlation. In other words, particle correlation is the study of relationship between two variables by eliminating the effect of the third variable on both the variables. For example, the study of correlation between demand for a product and income of consumer assuming the price to be a constant factor.

**BCom 1st Year Correlation Long Question Answer Notes**

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