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CA Foundation · Quantitative Aptitude · Correlation and Regression

Eleven yearly observations are available for two series. Comparing each year's change with the previous year, 7 of the pairs of deviations are in opposite directions and the rest move in the same direction. What is the coefficient of concurrent deviation?

The coefficient is −0.632. Eleven observations give n = 10 pairs of deviations. If 7 are opposite, c = 3, so 2c − n = −4, which is negative. Then rc = −√(4/10) ≈ −0.632. Using n = 11 would be a mistake.

  1. A-0.632Correct
  2. B+0.632
  3. C-0.400
  4. D-0.674

Explanation

With 11 observations, n = 10 pairs of deviations. Since 7 pairs are opposite, c = 10 − 7 = 3. Then 2c − n = 6 − 10 = −4, which is negative, so rc = −√(4/10) = −√0.4 = −0.632. The value −0.674 comes from wrongly taking n = 11. The value −0.400 omits the square root.

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