Skip to content

ACCA Applied Knowledge · Management Accounting · Summarising and analysing data

The correlation coefficient between two variables is -0.8. What is the coefficient of determination, and what does it mean?

The coefficient of determination is 0.64, meaning 64% of the variation in the dependent variable is explained by variation in the independent variable. Squaring removes the negative sign, and the remaining 36% is unexplained by the linear relationship.

  1. A-0.64; the relationship is negative so the explained variation is negative
  2. B0.80; 80% of variation in y is explained by x
  3. C0.64; 64% of the variation in y is explained by variation in xCorrect
  4. D0.64; 36% of the variation in y is explained by variation in x

Explanation

r-squared = (-0.8)^2 = 0.64, so 64% of the variation in y is explained by the linear relationship with x. The sign disappears on squaring, ruling out option A. Option D reverses the explained and unexplained portions: 36% is unexplained.

Did you get it right without looking?

One question tells you little. A timed set on Summarising and analysing data shows your real accuracy, how long you take and where you lose marks.

Practise Summarising and analysing dataFree diagnostic mock

More Summarising and analysing data questions