Introduction
UltraTech Cement Limited is a Mumbai-based Indian cement firm that is part of the Aditya Birla Group. With a capacity of 116.75 million tonnes per year, UltraTech is India’s largest producer of grey cement, ready-mix concrete (RMC), and white cement. Outside of China, it is the only company in the world with a capacity of more than 100 million tonnes in a single country.
Objective
To calculate β & find its significance
Data collection
The data was gathered from a secondary source, the NSE’s official website. Data on the NSE’s daily closing stock price & the UltraTech Cement has been gathered. The data has been narrowed down to the weekend (Friday) closing price only.
Data Analysis
Regression Statistics
Multiple R 0.81598714
R Square 0.665835
Adjusted R Square 0.65840912
Standard Error 277.761979
Observations 47
Interpretations:
Here, we can observe that the R square value is 0.665835, which means that 66.5835% of weekly returns of UltraTech Cement can be explained by Nifty.
We can infer that to the given extent UltraTech Cement does follow the Nifty trend.
ANOVA
df SS MS F Significance F
Regression 1 6917732.72 6917732.72 89.6640152 2.7915E-12
Residual 45 3471827.26 77151.7169
Total 46 10389560
Interpretations:
H0: Nifty is not influencing the weekly returns of UltraTech Cement
H1: Nifty is influencing the weekly returns of UltraTech Cement
Here as the F value is 89.6640152 which is more than 4, thus we reject the null hypothesis & accept the alternate hypothesis, concluding that nifty is influencing the weekly returns of UltraTech Cement.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 1785.92493 567.904693 3.1447617 0.00294284 642.10616 2929.74369 642.10616 2929.74369
X Variable 1 0.32722633 0.03455725 9.46910847 2.7915E-12 0.25762446 0.39682821 0.25762446 0.39682821
Interpretations:
We can observe here that the Beta value is 0.39682821 meaning that 1 unit change in Nifty leads to 0.39682821 change in weekly returns of UltraTech Cement. Also, the value of beta is positive indicating the presence of a positive relationship between the two variables.
The P value is 2.7915E-12 which is less than 0.05, thus the model is significant at 95% confidence interval.