What does it mean for two variables to be perfectly correlated?
What will be an ideal response?
Ans: Two variables are perfectly correlated when they are linear transformations of each other. This means that one can perfectly predict y from x; that is, y is a linear function of x. There is a perfect correlation between x and y when y = a + b(x) In this case, r will be ?1 or 1 depending on the sign of b, the slope of the linear transformation.
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