DATA PROCESSING ASSIGNMENT

CORRELATION CO-EFFICIENT
The correlation co-efficient is a statistical measure of the strength of the relationship between the
relative movements of two variables. The values range between -1.0 and 1.0.
PEARSON CORRLATION COEFFICIENT
Pearson's correlation coefficient is the test statistics that measures the statistical relationship, or
association, between two continuous variables. It gives information about the magnitude of the
association, or correlation, as well as the direction of the relationship. Pearson correlation is the
one most commonly used in statistics.
SOLUTION
Percentage of respondents employed in service sector is considered as independent variable= X
Percentage of respondents employed in owning car is considered as dependent variable =Y
INTERPRETATION
Pearson coefficient of correlation indicates the degree of relationship between two variables
which varies from positive 1 to negative 1. The positive value of r which is derived from the
given dataset I.e. 0.98 signifies that there is a strong positive correlation between the variables.
The correlation is generally considered strong above 0.7. Therefore, 0.98 value of r represents a
very strong positive correlation I.e. change in one variable has an impact on other. Here, 0.98
is a number not a percentage.
There is a direct relationship between the percentage of respondents employed in service sector
and the percentage of respondents owning one or more cars, in a same direction I.e. increase in
one variable is followed by a corresponding increase in the other variable and decrease in one
variable is followed by a corresponding decrease in the other variable

respondents employed in service sector α respondents owning one or more car

The result also signifies that the respondents associated with service sector have more car
ownership rate. Therefore, respondents from Gulberg who have highest employment rate in
service sector, also have highest car ownership rate and vice versa in Shahdara.
One more interpretation that we can make is that people associated with service sector has more
income (earn handsome amount). Therefore, they have more car ownership rate.