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CA Foundation · Quantitative Aptitude · Correlation and Regression

An analyst studies 17 yearly observations of the price of a commodity and its demand. Only 2 pairs of deviations are concurrent, that is, they have the same direction. What is the coefficient of concurrent deviation?

The coefficient is −0.866. Seventeen observations give N = 16 pairs of deviations, with C = 2. Then (2C − N)/N = −12/16 = −0.75, which is negative, so rc = −√0.75 ≈ −0.866.

  1. A-0.866Correct
  2. B+0.866
  3. C-0.750
  4. D-0.875

Explanation

With 17 observations, N = 16 and C = 2. Then 2C − N = 4 − 16 = −12, and (2C − N)/N = −0.75. Because this is negative, rc = −√0.75 = −0.866. The value −0.75 forgets the square root, and +0.866 ignores the negative sign.

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