Covariance and Correlation:
Covariance is a measure of quantitative analysis that measures the movement of one variable in relation to another variable. Eg: How do stocks A and B move with each other. When one moves up does the other also move up or down or and by what measure. Covariance is measured in square units and therefore is difficult to handle. Therefore it has been standardised by dividing the covariance by the standard deviations of the two variables. The standardised form is called correlation coefficient or just correlation and this measure does not have any units.
Permutations and combinations:
Permutations is how many ways can r items be selected from n items if the order of selection is important.
Combinations refer to in how many ways can r items be selected from n items if the order of selection is not important.
The formula for combination is given as,
n! / (n-r)! * r!
that’s all in this post guys….over the next two posts we will look into discrete and continuous randon variables and various probability distributions….stay tuned by subscribing to this blog or its push notifications…bye..