Hello,
just wondering about primer 4 module statistics 2:
for example on correlation, didn't you put an example of covariance instead of correlation? page.5, version 10.0.3.
Let us
calculat
e
the covariance between two stocks
-
CIPLA and Dr REDDY's.
We are using the daily price returns, which are cal
culated from the available daily closing price data.
The daily price return is calculated as
-
[Adj Close Price Today/ Adj
C
lose Price Yesterday]
-
1
Once you have calculated the daily price return, you can
c
alculate covariance using the excel
function “CO
RREL” where array 1
is
daily return of stock 1 and array 2 is daily return of stock 2
.
If t
he correlation coefficient comes out to be 0.49
,
which is positive
,
the stocks are
said to be
positively correlated to each other.
isn't it supposed to be an example on correlation instead of covariance? please confirm. Thx