Decoding “CORRELATION” in Data Mining: The Ultimate Guide
Feeling like you’re on a treasure hunt in the world of data, trying to find hidden links in your business numbers?
You’re in the right place!
This short guide will teach you all about “correlation”.
Picture ‘Price’ and ‘Sales’ as buddies in a data dance, moving in sync. We’ll explore how to spot their rhythm and what it means for your business.
What is Correlation, Really?
Let’s say, two best friends, Price and Sales.
They do almost everything together. “When Price gets an extra dollar, Sales gets an extra customer.”
This ‘togetherness’ is what statisticians call correlation.
It’s a sneak peek into how two sets of data — let’s say the temperature and ice cream sales — play along. If they seem to move hand in hand, that’s correlation for you.
What is a Correlation Coefficient?
Now, how well do Price and Sales get along?
We score their friendship on a scale of -1 to 1 — this is the correlation coefficient.
