Title: Relationship of Red Tape and Nifty 50
Author: Rutuja Sawant
Introduction
Red Tape is a company that has recently gone public on the stock market. With a focus on simplifying complex processes and reducing bureaucracy, Red Tape has made a name for itself in industry. Despite its young age, the company has already shown impressive growth and potential for future success. As a publicly traded company, Red Tape is now more accessible to investors and customers alike, poised to make a significant impact on the market. With a strong leadership team and innovative approach, Red Tape is a company to watch in the coming years.
Objective
To find out beta of Red Tape and its significance
Data Collection
Data of Red Tape and Nifty 50 was downloaded from NSE site for the period of 1st May 2023 to 30th April 2024.
Found out weekly Friday prices of Nifty 50 and Red Tape
Weekly returns were calculated from the formulae.
( Yt+1 – Yt ) Yt * 100
Weekly return of Nifty 50 termed as “x “
Weekly return of Red Tape is termed as ” y “
Y was regress on X
Data Analysis
Weekly return of Red Tape = (1.19) + 0.30 Weekly return of Nifty 50
(1.083)
N = 32, R2 = 0.005, F = 0.16, P value = 0.6889
The above equation shows the relationship between Nifty 50 and Red Tape. Positive sign before the coefficient of Nifty 50 tells us that there is a positive relationship if Nifty 50 rises 1-unit, Red Tape will rise by 0.30 units and vice versa. Figure in bracket is tstat for beta and the P value for which is 0.28 which is more than 0.05 meaning beta is statistically significant. N = 32, R2 = 0.005 which means 0.5% of Red Tape’s returns are explained by Nifty 50. F = 0.16 and P value for that is 0.28 it is more than 0.05 meaning overall model is statistically significant at 5% level.
Conclusion
Beta is negative then avoid doing any investment.