Relationship of Nifty 50 Index with Yuken India Limited
Author: Yash Patil
Introduction:
Yuken India Limited is a leading manufacturer of hydraulic equipment and systems in India. Established in 1976, it is a subsidiary of Yuken Kogyo Co. Ltd., Japan. The company specializes in hydraulic products such as pumps, valves, cylinders, and systems for various industries including machine tools, steel mills, plastic moulding machines, construction equipment, and more. Yuken India is known for its commitment to quality, innovation, and customer satisfaction. With a strong presence in the Indian market, it has earned a reputation for reliability and performance in the field of hydraulics.
Objective: To find Beta (β) of Yuken India Limited and its significance
Data Collection:
Nifty 50 Index and Yuken India Limited data was collected from nseindia.com website for the period of one year dating from 1st February 2023 to 31st January 2024. The historical data collected was manipulated using Microsoft Excel to get Friday closing prices of both, the index and the company. Weekly returns were based on the closing prices were calculated using Excel tools and with use of Regression analysis, weekly returns of Yuken India Limited were regressed on weekly returns of Nifty 50 Index.
Data Analysis:
Equation of regression of weekly returns of Yuken India Limited on weekly returns of Nifty 50 Index-
Format of Regression equation is Y = α + β(X)
weekly returns of Yuken India Limited = 1.17935 – 0.403869 × weekly returns of Nifty 50 Index
(-0.67387)
Where,
Number of Observations = 48,
R Square = 0.009775,
F = 0.454102,
P-value = 0.50377
Interpretation-
- The above equation shows relationship between weekly returns of Yuken India Limited Company and weekly returns of Nifty 50 Index.
- Negative sign means inverse relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of Yuken India Limited Company falls and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Yuken India Limited Company will fall by 0.403869 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.50377, which is greater than 0.05 meaning β is not statistically significant at 5% significance level.
- Number of Observations are 48, R-square value is 009775 meaning approximately 0.9% of weekly returns of Yuken India Company Limited are explained by weekly returns of Nifty 50 Index. Balance 99.1% (approximate) is error due to other variables which are not in the model.
- F is 454102, the P-value of which is 0.50377, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (-0.40386) is less than 1, it is good to invest in Yuken India Company Limited for long term.