CORELATION AND REGRESSION

INDEX
OBJECTIVE WHAT IS CORELATION AND REGRESSION APPLICATION OF CORELATION AND REGRESSION LIVELY PROJECT

OBJECTIVE OF CORELATION
correlation analysis contributes to the understanding of economic behavior aid in locating the critically important variables on which other depends

the effect of correlation is to reduce the range of uncertainty of our prediction, the prediction based on correlation analysis will be more reliable and near to reality
in economic theory we come across several types of variables which shows some kind of relationship For ex. There exist a relationship between price, supply and quantity demanded ; convenience,amenties and service standards are related to customer retention correlation analysis helps in quantifying precisely the degree of association and direction of such relationship

Correlation are useful in the areas of heath care such as determining the validity of reliability of clinical measures or in expressing how health problems are related to certain biological or environmental factor

OBJECTIVE OF REGRESSION
regression analysis helps in developing a regression equation by which the value of a dependant variable can be estimated given a value of an independent variable regression analysis helps to determine standards error of estimate to measures the variability or spread of values dependant variable with respect to regression line Descriptive or explanatory that means what factors influencing variability in dependant variable for ex. Factors contributing to higher sales among companys sales force for the purpose of prediction for ex. Setting normal quota or baseline sales we can also use estimated equation to determine normal and abnormal or outier observation

What is correlation?
A statistical techniques that is used to analyse the strength and direction of the relationship between two quantitative variables is called correlation analysis That means the correlation is the degree of relationship

What is regression?
A statistical techniques that express the relationship between two or more variables in the form of an equation to dependant variable which is estimated in equation based on the independent variable is called regression analysis That means regression is used for forecasting and to calculated future value

EXAMPLE FOR CORRELATION AND REGRESSION

APPLICATIONS OF CORRELATION
Application of Correlation Analysis to Business Research purpose:The purpose of this research is to analyze the relationship between twomacroeconomic variables as a means of improving the accuracy of estimations for demand for retail sales. The two macroeconomic variables are the rate of inflation and real wage levels.

APPLICATIONS OF CORRELATION(2)
The chain of assumptions upon which this analysis is based is as follows: (1) an increase in the rate of inflation causes goods to be more difficult to purchase, all other factors remaining unchanged; (2) an increase in the rate of inflation causes the purchasing power of wages to decrease, all other factors remaining equal. A decrease in the rate of inflation is assumed to have the opposite effects. The chain of assumptions leads to the following hypothesis: A change in the rate of inflation will lead to a decrease in demand for retail sales.

APPLICATIONS OF CORRELATION(3)
testing: To test this hypothesis, the relationship between changes in the rate of inflation and changes in the level of real wages was assessed through the application of quantitative analysis. The quantitative procedure applied was Pearson productmoment correlation analysis. Statistical significance of the relationship between the two variables was established at the p<.05 level. Inflation was represented by the Consumer Price Index (CPI) for all items. For purposes of this analysis, changes in the CPI from the prior year were used, as opposed to the actual CPI. The changes in the CPI from the prior year were calculated for each year included

APPLICATIONS OF REGRESSION(1)
Trend Line Analysis Risk Analysis for Investments Sales or Market Forecasts Total Quality Control Linear Regression in Human Resources