Correlation Is a Statistical Measure of the Relationship Between a Series

question 13

Multiple Choice

Correlation is a statistical measure of the relationship between a series of numbers representing data. Which of the following statements about correlation is (are) correct?
I. Perfectly negatively correlated describes two negatively correlated stocks that have a correlation coefficient of -1.
II. Perfectly positively correlated describes two positively correlated stocks that have a correlation coefficient of 0.

• A) Only statement I is correct.
• B) Only statement II is correct.
• C) Both statements I and II are correct.
• D) Neither statement I nor II is correct.

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Definitions:

Analysis Period

A specific time frame over which economic or financial performance is examined.

Horizontal Analysis

Financial analysis technique that compares account values reported on financial statements over two or more periods to identify trends and growth patterns.

Intra-company Analysis

The examination and comparison of financial and operational performance within different departments, divisions, or units of the same company.

Base Period

A specific time period used as a reference point for comparing financial or economic data across different periods.