# Interpretation of r and r^2

#### startraveler19

##### New Member
I am doing regression analysis on two stocks. The correlation coefficient is -0.7190 and the coefficient of determination is 0.5170. I am confused on how to interpret this. Is this correct...when stock A goes up 1%, 50% of the time stock B will go down 0.72%?

#### hlsmith

##### Less is more. Stay pure. Stay poor.
Coefficient of Determination: 51% of the variation in the dependent variable can be explained by the independent variable.

I have never seen correlation interpreted like that. Typically you would see reported that there is a negative linear correlation between the variables with a value of -0.72.

#### noetsi

##### No cake for spunky
Aside from the purely theoretical interpretations hlsmith noted, in certain fields like business they have developed their own interpretations of what various statistical realities mean substantively. You would have to know the pertinent literature and decide in your own mind if that is a reasonable interpretation.