Calculation of Beta for Abbott India Limited and Its Significance
Author’s Name: Aditya Dubey
Introduction
Since 1910 Abbott India Limited a publicly listed company and a subsidiary of Abbott Laboratories, takes pride in offering high-quality trusted medicines in multiple therapeutic categories such as women’s health, gastroenterology, cardiology, metabolic disorders and primary care.
Objectives
To calculate beta of Abbott India Limited and its significance.
Data Collection
Data collection for the period starting from 1st December 2021 to 30th November 2022 has been downloaded from nse.com. Then Friday weekly Closing Prices have been calculated.
And weekly data of equity share of the chosen company has been regressed on weekly report of NIFTY50.
Data Analysis
Regression Equation that was formed after the calculations is-
=0.247+0.166NiftyX+e
(1.077)
Where, N=49; R2=0.024 F=1.161
Interpretation
The equation mentioned above tells us about the relationship between Nifty50 value and Abbott India Limited stock prices.
Presence of Positive sign in the equation represents that there’s direct relationship between the two i.e., if the value of NIFTY50 rises, stock price of Abbott Ltd. will also rise. The Co-efficient of NIFTY is 0.0247 which means if NIFTY rises by 0.0247 units the stock price of Abbott India Ltd will rise by 1 unit and vice versa.
Total Number of Observations are 49.
Figure in the bracket is T-stat and the P-Value of which is 0.286 which is more than 0.05 which means p is statistically insignificant at 3% level. Also, it is more than 0.01 so we can say that p is statistically insignificant at 1% level.
R2 is 0.024 which means 2% of Abbott(Y) is explained by NIFTY(X) balance 98% is error. Error here is due to variables which aren’t in the model.
F is 1.161 the P-Value for which is 0.286 which is more than 0.01 which means overall the model is statistically insignificant.
Conclusion
As from the above mentioned regression equation it can be observed that the Beta is 0.2476 which is less than 1 which states the fact that it is NOT good for investment in short term.