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Salam International Essay Example | Topics and Well Written Essays - 500 words

Salam International Essay Example | Topics and Well Written Essays - 500 words

Salam International - Essay Example From the excel output, the correlation matrix provides that while the correlation coefficient (R2) is 0.109, the adjusted correlation coefficient is -0.010 and that of the independent P/E and P/B ratios is -0.0102. The result of the correlation coefficient implies that 10.9% of the total variation is explained by the independent variables P/E and P/B while the remaining 89.1% represents the unexplained variation by the regression model. Consequently, the result of the adjusted R2 implies that the model implies that the model presents the best estimate of the degree of the relationship for our variables in the population under study. Consequently, the output presents the standard error as 0.0255 which implies that approximately 95% of the observations should fall within plus/minus 5% of the of the line fitted by the model which presents a close match for the prediction interval. Lastly, the intercept of 0.067 implies that given a P/B ratio of 0, then we can predict ROE as 0.067.

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