Mention the importance or significance of correlation.
Mention the importance or significance of correlation.
The study of correlation is of great significance because of the following reasons:
1. The correlation coefficient helps in measuring the extent of the relationship between two variables in one figure.
2. Correlation analysis facilitates the understanding of economic behaviour and helps in locating the critically important variables on which others depend.
3. When two variables are correlated, the value of one variable can be estimated, given the value of another. This is done with the help of regression equations.
4. Correlation facilitates the decision-making in the business world. It reduces the range of uncertainty as predictions based on correlation are likely to be more reliable and near to reality.
The study of correlation is of great significance because of the following reasons:
1. The correlation coefficient helps in measuring the extent of the relationship between two variables in one figure.
2. Correlation analysis facilitates the understanding of economic behaviour and helps in locating the critically important variables on which others depend.
3. When two variables are correlated, the value of one variable can be estimated, given the value of another. This is done with the help of regression equations.
4. Correlation facilitates the decision-making in the business world. It reduces the range of uncertainty as predictions based on correlation are likely to be more reliable and near to reality.
