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CA Foundation · Quantitative Aptitude · Correlation and Regression

In a scatter diagram drawn for the monthly electricity bill (₹) and the number of air conditioners running in 40 Delhi offices, the plotted points rise from the lower left to the upper right and lie very close to a straight line. Which conclusion is most appropriate?

The correlation is positive and close to +1. An upward-sloping pattern of points means both variables move in the same direction, and the tight clustering around a straight line shows the linear relationship is very strong.

  1. ACorrelation is positive and close to +1Correct
  2. BCorrelation is negative and close to -1
  3. CCorrelation is close to zero
  4. DCorrelation is positive but close to +0.5 only

Explanation

Points rising from lower left to upper right indicate positive correlation. Because they cluster tightly around a straight line, the linear relationship is strong, so r is near +1. A negative r would need points falling from upper left to lower right.

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