Usefulness of correlation - correlation regression analysis, Operation Research

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Usefulness of Correlation

1.Correlation  is very  useful  to economists  to study  the relationship  between  variables  like  price  and quantity  demanded. To businessmen it helps  to estimate  costs sales  price  and other related variables.

2.Some  variables show  some kind  of relationship, correlation  analysis  helps  in measuring the  degree of relationship between  the variables  like  supply  and demand  price an supply  income  and expenditure etc.

3.The relation  between variables  can be  verified and tested  fro significance with  the help of the  correlation analysis. The effect  of correlation  is to  reduce  the range  of uncertainty of our  prediction.

4. The coefficient  of correlation is a relative measure and we  can compare the  relationship  between  variables which are  expressed in different units.

5.Sampling  error can also  be calculated.

6. Correlation  is the  basis  for the  concept of regression  and ratio of variation.

 


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