when to use the method of actual data and concurrent deviation method of correlation
Answers
A very simple and casual method of finding correlation when we are not serious about the magnitude of the two variables is the application of concurrent deviations.
This method involves in attaching a positive sign for a x-value (except the first) if this value is more than the previous value and assigning a negative value if this value is less than the previous value.
This is done for the y-series as well. The deviation in the x-value and the corresponding y-value is known to be concurrent if both the deviations have the same sign.
Denoting the number of concurrent deviation by c and total number of deviations as m (which must be one less than the number of pairs of x and y values), the coefficient of concurrent-deviations is given by
Concurrent Deviation - Correlation & Regression, Business Mathematics & Statistics
If (2c–m) > 0, then we take the positive sign both inside and outside the radical sign and if (2c–m) < 0, we are to consider the negative sign both inside and outside the radical sign.
Like Pearson’s correlation coefficient and Spearman’s rank correlation coefficient, the coefficient of concurrent- deviations also lies between –1 and 1, both inclusive.
That is,
-1 ≤ r ≤ 1
Coefficient of concurrent-deviations - Practice problem
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cRAZY pRINCE