Permutations and Combinations
Permutation implies arranging all the members of a set into a sequence or order. In other words, if the set is already ordered, then the rearranging of its elements is called the process of permutation. For instance, planning the entry of Stock A before Stock B while taking trading positions.
Permutation Formula
A permutation is the choice of “r” things from a set of “n” things in an order or a sequence. Also, “n!” denotes n factorial and the formula goes as follows:
nPr = (n!) / (n-r)!
The formula above calculates the number of permutations.
The combination is a way of selecting items from a collection where the order or sequence does not matter. In smaller cases, it is possible to count the number of combinations. Combination refers to the combination of “n” things taken at a time without repetition.
For instance, keeping or selecting Stock A and Stock B for trading portfolio.
Combination Formula
A combination is the choice of “r” things from a set of “n” things without a particular order or sequence. Also, n! Is n factorial and r! is r factorial and the formula goes as follows:
nCr = (n/r) = nPr / r! = n! / r! (n-r)!