Introduction:
Divi’s Laboratories Limited is an Indian pharmaceutical company based in Hyderabad, Telangana, India that produces active pharmaceutical ingredients (APIs) and intermediates. Generic APIs, intermediates, and nutraceutical ingredients are manufactured and custom synthesised by the company. By market capitalization, Divi’s Laboratories is India’s second most valuable pharmaceutical company.
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 Divi’s Laboratories has been gathered. The data has been narrowed down to the weekend (Friday) closing price only.
Data Analysis:
Regression Statistics
Multiple R 0.70725365
R Square 0.50020773
Adjusted R Square 0.48910123
Standard Error 355.398315
Observations 47
Interpretations:
Here, we can observe that the R square value is 0.50020773, which means that 50% of weekly returns of Divi’s Laboratories industries can be explained by Nifty. We can infer that to the given extent Divi’s Laboratories does follow the Nifty trend.
ANOVA
df SS MS F Significance F
Regression 1 5688583.04 5688583.04 45.0374064 2.7372E-08
Residual 45 5683858.31 126307.962
Total 46 11372441.3
Interpretations:
H0: Nifty is not influencing the weekly returns of Divi’s Laboratories
H1: Nifty is influencing the weekly returns of Divi’s Laboratories
Here as the F value is 45.0374064 which is more than 4, thus we reject the null hypothesis & accept the alternate hypothesis, concluding that nifty is influencing the weekly returns of Divi’s Laboratories.
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -431.18256 726.637865 -0.593394 0.55588849 -1894.7063 1032.34123 -1894.7063 1032.34123
X Variable 1 0.29673475 0.04421623 6.71099146 2.7372E-08 0.20767869 0.38579081 0.20767869 0.38579081
Interpretations:
We can observe here that the Beta value is 0.38579081 meaning that 1 unit change in Nifty leads to 0.38579081 change in weekly returns of Divi’s Laboratories. Also, the value of beta is positive indicating the presence of a positive relationship between the two variables. The P value is 2.7372E-08 which is less than 0.05, thus the model is significant at 95% confidence interval.