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.

Question

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.

Quizplus · Accepted Answer

Statement I is correct as a correlation coefficient of -1 indicates a perfect negative correlation between two stocks, meaning that as one stock goes up, the other goes down in a linear fashion.
Statement II is incorrect as a correlation coefficient of 0 indicates no correlation between two stocks, not a perfect positive correlation. A perfect positive correlation would have a coefficient of 1.

Correlation Is a Statistical Measure of the Relationship Between a Series