Calculation of Beta for DK enterprises and Its Significance
Author’s Name: Disha Kewale
Introduction
D.K. Enterprises Global Limited is a leading manufacturer of leading paper base packaging materials. Self adhesive tapes and laminated products out of its manufacturing facilities in Haryana, Gujarat and Himachal Pradesh.
Objectives
To calculate beta of D.K. Enterprises 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-
=-7.8971NiftyX-56.97+e
(-0.292)
Where, N=50; R2=0.0017 F=0.085
Interpretation
The equation mentioned above tells us about the relationship between Nifty50 value and D.K. Enterprises stock prices.
Presence of Negative sign in the equation represents that there’s inverse relationship between the two i.e., if the value of NIFTY50 falls, stock price of D.K. Enterprises will also decline. The Co-efficient of NIFTY is -7.8971 which means if NIFTY by -7.8971 units the stock price of D.K. Enterprises will decline by 1 unit and vice versa.
Total Number of Observations are 50.
Figure in the bracket is T-stat and the P-Value of which is 0.771 which is greater than 0.05 which means p is statistically insignificant at 3% level. Also, it is greater than 0.01 so we can say that p is statistically insignificant at 1% level.
R2 is 0.0017 which means 0.17% of DK(Y) is explained by NIFTY(X) balance 99.83% is error. Error here is due to variables which aren’t in the model.
F is 0.085 the P-Value for which is 0.771 which is greater than 0.01 which means overall the model is statistically significant.
Conclusion
As from the above mentioned regression equation it can be observed that the Beta is -7.897 which is less than 1 which states the fact that it is NOT good for investment in short term.