Bivariate Correlation:

A correlation, or Bivariate correlation, measures the relationship between two variables. The correlation
measures the strength of the relationship. It is alternatively known as zero order correlation.
The strength of a correlation ranges from the absolute value from 0 to 1; the closer the correlation is to 1, the
stronger the relationship, the closer the correlation is to 0, the weaker the relationship. The direction can be
positive or negative.
Here, in the analysis of Bivariate correlation of One Bank Limited we have one dependent variable that is
Profit before tax and three independent variable those are Total operating income, total operating expenses
and provisions.
The bivariate correlation matrix found by using SPSS software is shown in bellow:

Here we see that, there is a significant relationship between the Total operating income and Total operating
expenses in 1% level of significance, as the coefficient is .996 which is the closest to 1. And we know that
coefficients closest to 1 has the most strongest relationship. In 1% level of significance, the relationship
between Total operating income and profit before tax is also significant. It is .976 and the p-value is .004.
Using the 5% level of significance, there is a strong relationship between total operating expenses and profit
before tax which is .956 and the p-value is .011.
Now here is a graph of scatter plot showing the relationship between the two varriable: Total operating
income and total operating expenses.

here we see that, all the data are lying closely to the regression line, this also give the prove of the strongest
relationship of the data of the two variable: total operating income and total operating expenses. It is based
on the 5% level of significance. But when we wil use 5% level of significance, the strongest relationship will
lie between the total operating expenses and profit before tax. The scatter diagram is shown bellow:

Partial correlation:
Using the SPSS software, the partial correlation matrix is shown below:

Here, in controling for the profit before tax there is a significatn relationship between Total operating
income and the provision which is .996 and the p-value is .004. The relationship of total operating income
with total operating expenses is also significant.
The scatter-plot showing the data of the two variableare stated bellow:

The graph shows that almost evry data are lying closest to the regression line, though there is variations.

Now in comparing the partial correlation and the bivaritae correlation, we see that there are some changes in
the correlation matrix. The comparative correaltion matrix is stated bellow:

In the above correlation matrix there are two parts. The upper part is the bivariate (zero-order) correaltion
and the lower half is the partial correlation where all the variables are controlling for profit before tax.
In the Bivariate correlation matrix, the relationship between Total operating income and total operating
expenses is .996 but in the partial correlation matrix when the two variable are controlling for profit before
tax, there coefficient is .993. It slightly decreases. That means the relationship between the two variable are
not significantly controlled by profit before tax.
But for the Total operating income and provision, the correlation is .655 in bivairate correlation matrix but it
become .996 when they are conrolled by the profit before tax. There occures a significant changes in the
correlations between the variabls when they come under the controll of the variable profit before tax. So
we can conclude that, the realtionship between the Total operating income and provision are significantly
controlled by profit before tax