Page 185 - DCOM203_DMGT204_QUANTITATIVE_TECHNIQUES_I

Quantitative Techniques – I

Notes

Notes Probable error of r
It is an old measure to test the significance of a particular value of r without the knowledge
of test of hypothesis.

According to Horace Secrist “The probable error of correlation coefficient is an amount
which if added to and subtracted from the mean correlation coefficient, gives limits within
which the chances are even that a coefficient of correlation from a series selected at random
will fall.”

1 r 2 1 r 2
.
.
.
Since standard error of r, i.e., S E. r , P E r . 0 6745
n n
Did u know?
1. Probable error of r, denoted by P.E.(r) is 0.6745 times its standard error.
2. The value 0.6745 is obtained from the fact that in a normal distribution covers 50%
of the total distribution.

Task Calculate Karl Pearson’s coefficient of correlation of first 5 coprime numbers. Also
find the rank correlation for the same data. Observe the difference, if any.

Self Assessment

Multiple Choice Questions:
11. Spearman’s rank correlation is a ............................. method of computing correlation between
two characteristics.
(a) Simple (b) Complex
(c) Rude (d) Crude
12. In Spearman’s rank correlation, various items are assigned ............................. according to
the two characteristics and a correlation is computed between these ranks.
(a) Ranks (b) Tanks
(c) Numbers (d) Standard

13. When the given data consist of some .................................... observations, the value of karl
pearson’s coefficient is likely to be unduly affected.
(a) Special (b) Extreme

(c) General (d) Usual
14. The coefficient of correlation obtained on the basis of ranks is called ....................................
(a) Spearman’s rank correlation (b) Correlation
(c) Regression (d) Karl Pearson correlation

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