Perfect correlation is that where changes in two related variables are exactly proportional.
It is of two types:
a) Positive perfect correlation and
b) Negative perfect correlation
There is perfect positive correlation between the two variables of equal proportional changes are in the same direction. It is expressed as +1. If equal proportional changes are in the reverse direction.
Then there is negative perfect correlation and it is described as -1.
a) Example of positive perfect correlation:
Price(Rs.) |
1 |
2 |
3 |
4 |
5 |
Supply(units) |
10 |
20 |
30 |
40 |
50 |
b) Example of perfect negative correlation
Price(Rs.) |
1 |
2 |
3 |
4 |
5 |
Supply(units) |
50 |
40 |
30 |
20 |
10 |