Author: Ruthu Ravi Anchan
Introduction: Royal Orchid hotels limited is a prominent hospitality company renowned for its luxurious accommodations and impeccable service. Royal Orchid hotels limited has emerged as a leader in the hospitality industry, offering a portfolio of upscale hotels and resorts in prime location across India and Internationally.
Objective: To find out BETA of Royal Orchid Hotels Limited and its significance.
Data collection: The data for Nifty 50 index and Royal Orchid hotels limited has been taken from NSEindia.com for the period 1-2-23 to 31-1-24. Weekly closing prices were found out. Weekly returns of Royal Orchid hotels limited were regressed on weekly returns of nifty50.
Data Analysis: Format of Regression equation is Y= α + β(X)
The equation of regression of weekly returns of Royal Orchid Hotels Limited on weekly returns of Nifty 50 + weekly returns of Royal Orchid Hotels = -0.0823 + 1.9990 X weekly returns of Nifty 50 index (Tstat = 3.0623)
Where,
Number of Observations = 48,
R Square = 0.1693
F = 9.3779
P-value = 0.0037
Interpretation:
The above equation, shows the relationship between weekly returns of Nifty 50 index and weekly returns of Royal Orchid Hotels limited.
Positive sign means direct relationship, meaning if weekly returns of Nifty 50 increases then the weekly returns of Royal Orchid Hotels limited will also increase.
If the weekly return of Nifty 50 index rises by Rupee 1, weekly returns of Royal Orchid Hotels limited will change by 1.9990.
Figure in the bracket is T- stat (3.0623) β, the P value for which is 0.0037, which is less than 0.05, meaning, β is a statistically significant at 5% level.
Number of Observations are 48, R-square value is 0.1693 meaning approximately 17% of weekly returns of Royal orchid Hotels Limited are explained by weekly returns of Nifty 50 Index. Balance 83% (approximate) is error due to other variables which are not in the model.
F is 9.3779, the P value of which is 0.0037, which is less than 0.05, meaning, overall, the model is statistically significant at 5% level.
Conclusion:
Since β is more than 1, it is good to invest for short term.