Problem Title:
To determine the relationship between Nifty and Vedanta Limited.
Author – Veda Kothamachu
INTRODUCTION OF COMPANY
Vedanta Limited, a subsidiary of Vedanta Resources Limited, is one of the world’s leading Oil & Gas and Metals company with significant operations in Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, and Aluminium & Power across India, South Africa, and Namibia.
For two decades, Vedanta has been contributing significantly to nation building. Governance and sustainable development are at the core of Vedanta’s strategy, with a strong focus on health, safety, and environment. Vedanta and its group companies have been featured in the Dow Jones Sustainability Index 2020
OBJECTIVE
To calculate beta of company and find its significance
Data Collection:
Data was collected from the NSE Website which comprises of historic data for the past 1 year. The Friday of each week of the year was taken into consideration. The resultant was calculated, and regression was performed on the data.
Data Analysis:
We know Y= a +bx1 Where b is the beta value. H0 – Null Hypothesis
H1 – Alternate Hypothesis
If the beta coefficient is significant, the interpretation is that for every 1-unit increase in the predictor variable, the outcome variable will increase by the beta coefficient value.
It was found that R Square is 0.04203, the regression Equation was found to be
Y= -0.5765+0.0034X
Here Beta value is +0.0034
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.20503262
R Square 0.04203837
Adjusted R Square 0.02026652
Standard Error 5.86069015
Observations 46
Interpretations:
We can see that the R square value is 0.0420, which means that Nifty can explain
4.2 % of the weekly returns of Vedanta. Because the proportion is low, we may deduce that Vedanta does not follows the Nifty trend to a certain extent.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -0.5765445 0.89882557 -0.641442 0.52456307 -2.388008384 1.23491945 -2.3880084 1.23491945
X Variable 1 0.0034582 0.00248871 1.38955338 0.17165627 -0.00155747 0.00847386 -0.0015575 0.00847386
We can observe here that the Beta value is 0.00346 meaning that 1 unit change in Nifty leads to 0.00346 change in weekly returns of Vedanta. We also need to note that the value is beta is positive indicating both of them are proportional to each other.
ANOVA
df SS MS F Significance F
Regression 1 66.3205304 66.3205304 1.93085859 0.171656268
Residual 44 1511.29832 34.3476891
Total 45 1577.61885
H0: Nifty is not influencing the weekly returns of Vedanta.
H1: Nifty is influencing the weekly returns of Vedanta.
Here as the F value is 1.93086 which is less than 4, thus we can accept the null- hypothesis and reject the alternate hypothesis, concluding that nifty is not influencing the weekly returns of Vedanta.
Also, the Significance F value is 0.1716 which is more than .025 thus the model isn’t significant.