Relationship of Siemens Ltd with Nifty50
Author: Sanika Kulkarni
Introduction:
Siemens Limited is a technology company focused on industry, infrastructure, digital transformation, transport as well as transmission and generation of electrical power. The company’s mission is to provide technologies that improve the quality of life and create lasting value for the society. The company operates through four segments: Energy, Smart Infrastructure, Mobility, and Digital Industries. The Energy segment provides integrated products, solutions, and services for oil and gas production, and power generation. The Smart Infrastructure segment supplies products, systems, solutions and services for transmission and distribution of electrical energy for power utilities, industrial companies, and infrastructure segments. The Mobility segment provides solutions for passenger and freight transportation, including rail vehicles, rail automation systems, road traffic technology, and IT solutions. The Digital Industries segment offers automation, drives, and software technologies covering complete life cycle from product design and execution to product services.
Objective: To calculate Beta (β) and find its significance.
Data collection:
Data for Nifty50 and Siemens Limited was downloaded from NSE website for the period of 01.03.2023 to 28.02.2024. Friday closing prices were calculated and weekly returns of Siemens Limited were regressed on weekly returns of Nifty50.
Data analysis:
Equation: Y = α + β(X)
Siemens Ltd = 0.499 + 0.606 Nifty50
(1.873)
Where,
Number of observations: 48
R square: 0.071
F: 3.509
P-value of F: 0.067
Interpretation:
The above equation shows the relationship between Nifty50 and Siemens Limited. Positive sign means direct relationship. If the weekly returns of Nifty50 rises, the weekly returns of Siemens Ltd rises and vice versa. If the returns of Nifty50 rises by 1 unit, the returns of Siemens Ltd will rise by 0.606 units and vice versa. T-stat for b is given in the bracket and p-value for this is 0.067 which is more than 0.05, meaning b is not statistically significant at 5% level. It means that the weekly returns of Nifty50 does not play a significant role for Siemens Ltd. Number of observations is 48. R square is 0.071, meaning 7.1% of the weekly returns of Siemens is explained by Nifty50. Balance 92.9% is error due to the variables not taken in the model. F is 3.509 and the p-value for which is 0.067, which is more than 0.05. So overall, the model is not statistically significant.
Conclusion:
Since, Beta (β) is less than 1, this company is good for long term investments.
