Regression of Archean chemical with nifty 50

Relationship between Nifty and ARCHEAN

Author: Aakash Prajapati

 

Introduction:

Archean Chemical Industries Limited is a leading specialty chemicals manufacturing company based in India with a wide presence in the global markets. ​We are the first of its kind integrated plant in India to produce Industrial Salt, Bromine and Sulfate of Potash.

Objective:

To Calculate Beta(β) and its Significance.

 

Views/Reviews:

  1. [Dilip Davda]  ACIL has created a niche place as a specialty chemical manufacturer and exporter. It has started bearing fruits for its undergoing downstream expansions that have helped in improving margins.

Data Collection:

  • Firstly, I visited the NSE website.

 

  • Then, I clicked on the Historical Data option under the Data and Reports section.

 

  • I downloaded the data of Archean and Nifty 50 index from 01-Oct-2022 to 30-Sep-2023 in excel format.

 

  • In the end, I sorted the data in excel for analysis.

 

 

Data Analysis:

The regression equation has the form:

Y = a + b*X

Where, Y is the dependent variable, X is the independent variable, a is the intercept, and b is the slope.

In our case, AU Small Finance Bank is the dependent variable and Nifty 50 is the independent variable.

Intercept, a = 0.346424931125502

Slope, b = 0.0212079128535023

So, the regression equation is given by-

Y(Archean) = 0.346424931125502 + 0.0212079128535023 * X(NIFTY)

 

The above equation shows us the relationship between AU Small Finance Bank and Nifty. The positive sign indicates that if Nifty rises then the price of AU shares will also rise and vice-versa. If Nifty rises by 100 points, then AU shares will rise by 2.1 points.

T-stat for b (Co-efficient of Nifty) is 0.039465943674537 and the P-value is 0.968715231159195 which means that the coefficient of Nifty is not significant at the 0.05 level, as the p-value is greater than 0.05. This implies that Nifty has  insignificant effect on Archean, and they have a very weak relationship.

The number of observations is 43. R^2 is 0.0000389375 which indicates that the model does not explains  the variation in the price of Archean. This means that the model is not a good fit for the data, and there are other factors that affect the price of Archean more than the price of Nifty 50. 

 

Conclusion:

Beta(β) for our Case is 0.0212079128535023.

A beta of 0.0212079128535023 for the above Nifty and archean regression model indicates that the price of AU Small Finance Bank is more volatile than the price of Nifty 50. It means that for every 1% change in the price of Nifty 50, the price of Archean changes by 0.021%. It also means that AU Small Finance Bank has a higher risk and higher average return than Nifty 50.

 

References:

 

  1. https://www.chittorgarh.com/ipo-recommendation/archean-chemical-ipo/1334/#:~:text=Archean%20Chemical%20IPO%20Review%20by%20Dilip%20Davda%20(Apply)&text=Based%20on%20its%20FY23%20earnings,medium%20to%20long%2Dterm%20rewards.

 

 

 

 

 

Leave a comment