Relationship of Nifty 50 Index with Relaxo Footwear Limited
Author: Rohan Pedini
Introduction:
Relaxo Footwear is a leading Indian footwear brand known for its comfort and style. With a diverse range of designs catering to various tastes and preferences, Relaxo offers footwear that blends fashion with functionality. Whether it’s casual flip-flops, trendy sandals, or durable sports shoes, Relaxo ensures superior quality and affordable prices, making it a favourite among customers across the country.
Objective: To find Beta (β) of Relaxo Footwear Limited and its significance
Data Collection:
The data from Nifty 50 and Relaxo Footwear Limited data has been downloaded from nseindia.com website for the period from (1-2-23 to 31-1-24). Weekly closing prices were found out. Weekly returns of Relaxo Footwear Limited were regressed on weekly returns of Nifty 50 Index.
Data Analysis:
Equation of regression of weekly returns of Relaxo Footwear Limited on weekly returns of Nifty 50 Index-
Format of Regression equation is Y = α + β(X)
weekly returns of Relaxo Footwear Limited = 0.3902 + 0.1028× weekly returns of Nifty 50 Index
Where,
Number of Observations = 48,
R Square = 0.0243,
F = 1.1487,
P-value = 0.2894
Interpretation–
- The above equation shows relationship between weekly returns of Relaxo Footwear Limited Company and weekly returns of Nifty 50 Index.
- Positive sign means direct relation, meaning if weekly returns of Nifty 50 Index rise then weekly returns of Relaxo Footwear Limited Company also rise and vice-versa.
- If weekly returns of Nifty 50 Index rise by 1-unit, weekly returns of Relaxo Footwear Limited Company will rise by 0.1028 unit and vice-versa.
- Figure in bracket shows t-stat for β, P-value for which is 0.2894, which is greater than 0.05 meaning β is statistically significant at 5% significance level.
- Number of Observations are 48, R-square value is 0.0243 meaning approximately 2.4% of weekly returns of Relaxo Footwear Company Limited are explained by weekly returns of Nifty 50 Index. Balance 97.6% (approximate) is error due to other variables which are not in the model.
- F is 1.1487, the P-value of which is 0.2894, which is more than 0.05 meaning overall, the model is not statistically significant at 5% significance level.
Conclusion:
As β (0.1028) is less than 1, it is good to invest in Relaxo Footwear Company Limited for long term.