We use a combination of N-body simulations of the hierarchical clustering of dark matter and semi-analytic modelling of the physics of galaxy formation to probe the relationship between the galaxy distribution and the mass distribution in a flat , cold dark matter universe with mean density \Omega _ { 0 } = 0.3 ( \Lambda CDM ) . We find that the statistical properties of the galaxy distribution in the model , as quantified by pairwise velocity dispersions and clustering strength , can be quite different from those displayed by the dark matter . The pairwise line-of-sight velocity dispersion of galaxies is sensitive to the number of galaxies present in halos of different mass . In our model , which is consistent with the observed galaxy number distribution , the galaxy velocity dispersion is \sim 40 \% lower than that of the dark matter and is in reasonable agreement with the values measured in the Las Campanas redshift survey by Jing et al . over two decades in pair separation . The origin of this offset is statistical rather than dynamical , and depends upon the relative efficiency of galaxy formation in dark matter halos of different mass . Although the model galaxies and the dark matter have markedly different correlation functions in real space , such biases conspire to cause the redshift space correlation functions to be remarkably similar to each other . Thus , although genuinely biased relative to the dark matter on small scales , the distribution of galaxies as seen in redshift space , appears unbiased . The predicted redshift-space galaxy correlation function agrees well with observations . We find no evidence in the model for a dependence of clustering strength on intrinsic galaxy luminosity , unless extremely bright galaxies , two magnitudes brighter than L _ { * } , are considered . However , there are significant differences when model galaxies are selected either by morphology or by colour . Early type or red galaxies show a much stronger clustering amplitude than late type or blue galaxies , particularly on small scales , again in good agreement with observations .