Regression Analysis of weekly Returns between NIFTY50 and Polycab India limited.
Title: Regression Relationship of Polycab India Limited with NIFTY50.
Author: Pooja Yadav
Introduction: Polycab India Limited is a leading Indian manufacturer of wires and cables, catering to various sectors such as power, telecommunications, automotive, and construction. The company has a wide range of products, including electrical wires, cables, fans, switches, and lighting products. Polycab India Limited is known for its high-quality and reliable electrical solutions, which are used in residential, commercial, and industrial applications. The Polycab India Limited stock is listed on the major stock exchanges in India and is considered a prominent player in the electrical industry with a strong market presence and consistent growth over the years.
Objective: To understand the regression relationship between average weekly returns of NIFTY50 and Ploycab India Limited.
Literature Review:
1. The most recent models for evaluating the strength and fatigue life of cables are shown and discussed. The delineations depend on trial information and experience acquired from the plan and evaluation of a few significant link upheld spans. It is shown the way that review results might be utilized to refresh the dependability of links. The outcomes of Ultra Sonic inspections serve as examples for the procedure. At last, parts of plan and evaluation of stay links are thought of. The influence of design philosophy and corrosion protection on the stay cable resistance factors is given special attention. (M.H. Faber, 2003)
2. The design of medical devices and subsequent treatment of a wide range of medical diagnoses rely heavily on fine wires and cables. Gadgets, for example, guide wires, catheters, pacemakers, stents, staples, useful electrical excitement frameworks, eyeglass outlines and orthodontic supports can be included wires with measurements going from 10s to 100s of micrometres. When it comes to either internal or external treatment options, dependability is of the utmost importance. While the occurrence of checked breaks in a considerable lot of these gadgets is very low, the criticality of these parts requires major areas of strength for an of the variables controlling the crack and weakness behaviour.1,2 Furthermore, streamlining of the exhibition and dependability of these gadgets requires characterisation of the exhaustion and crack properties of its constituent wires. An overview of the effects of changes in material composition, microstructure, processing, and test conditions on the fracture and fatigue behaviour of biomedical wire and cable systems is followed by a review of the cable architecture and stress states encountered during testing. The review comes to a conclusion with suggestions for future work. (J.L. Gbur, 2016)
Data Collection:
The closing price data of Nifty50 and Polycab India Limited was taken from www.nseindia.com (National Stock Exchange) for the time period 1ST APRIL 2022 to 31ST MARCH 2023.
From the available data, the closing rates of all the Fridays in the year was sorted to find out weekly returns for both Nifty as well as Polycab then the weekly returns were calculated for both by using formula – Weekly return = (C3-C2)/C2 *(100) Where C3 represent week closing price and C2 is previous week closing price. Once the data is calculated, weekly return column for NIFTY50 is considered as “X” variable and the weekly returns column for Polycab India Limited is considered as “Y” variable.
Data Analysis:
We can write the equation in the form of Y= a+b(X)
Where, Y= Polycab India Limited
X=Nifty-50 Returns
a=intercept and b=Slope
Hence, the equation become,
Y= (0.410211305) + 0.924063222*X
DLF Return = (0.410211305) +0.924063222*(Nifty-50 Return)
(t-stat =4.110542906)
N=51 R2=0.256410383 and F=16.89656298
The above equation shows the relationship between X and Y (As b is positive) means there is a direct relationship which implies that is X rises, Y also rises and vice versa. In this equation b =0.92, that is if X rises by 1 unit, Y will rise by 0.92-unit, t-stat for b is greater than critical value, so b is statistically significant at 5% significance level.
R^2 = 0.256410383 which means only 25.64% of Y i.e., Polycab India Limited weekly returns is explained by X i.e., Nifty returns.
Similarly, F = 16.89656298, which is also greater than table value.
And p-value is greater than 0.05, so the model is statistically significant at 5% level of significance.
Conclusion:
As, beta (b) is less than 1, which implies Polycab India Limited is good for long term investment
References:
M.H. faber, S. Engelund, R. Rackwitz(2003)., Structural Safety, Aspects of parallel wire cable reliability, volume 25, issue 2, pages 201-225, April 2003.
J.L. Gbur & J.J. Lewandowski (2016)., Department of Material science and Engineering, Fatique and fracture of wires and cables for biomedical applications, pages 231-314, May 2016, Western Reserve University Cleveland.