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Apollo Tyres & NIFTY50 Regression Analysis

The document analyzes the weekly return relationship between Apollo Tyres Ltd and the NIFTY50 index over a one-year period from March 2019 to February 2020. Regression analysis was conducted using the weekly return data for both, and showed a positive relationship between the two, with Apollo Tyres' weekly returns explained 34.77% by movements in the NIFTY50. The beta value calculated was 0.2286, indicating Apollo Tyres' returns tend to move less than the overall market.

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Ganesh Gholap
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6 views2 pages

Apollo Tyres & NIFTY50 Regression Analysis

The document analyzes the weekly return relationship between Apollo Tyres Ltd and the NIFTY50 index over a one-year period from March 2019 to February 2020. Regression analysis was conducted using the weekly return data for both, and showed a positive relationship between the two, with Apollo Tyres' weekly returns explained 34.77% by movements in the NIFTY50. The beta value calculated was 0.2286, indicating Apollo Tyres' returns tend to move less than the overall market.

Uploaded by

Ganesh Gholap
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Regression Model

Title: Relationship of weekly returns between Apollo Tyres Ltd with NIFTY50

Author: Aishwarya Shedge/ Kharghar E-MBA/ Batch -15 / 016


Introduction:

Apollo Tyres Ltd is the world’s seventh largest tyre manufacturer, with annual consolidated
revenues of $172.76 billion (US$2.46 billion) in March 2018.
It was incorporated in [Link] first plant was commissioned in Perambra, Thrissur, Kerla, India.
The company has 04 manufacturi

ng unit in India. It has a network of nearly 6000 dealerships in India, of which over 2500 are exclusive
outlets.
It gets 69% of its revenue from India, 26% from Europe and 5% from other geographies.
Objectives: To calculate BETA of Apollo Tyre Ltd and to finds its significance.

Data Collection: The closing price data of Apollo Tyres Ltd & Nifty50 and is taken from
[Link]

Time period taken - 01 March, 2019 to 28 February, 2020.

From the available data, the closing rates of all the Fridays in the year was sorted to find out
weekly returns for both Nifty as well as for Apollo Tyre Ltd. Then the weekly returns
was calculated for both by using formula –

Weekly Return =(C3-C2)/(C2*100)


where, C3 is present week closing price and C2 is the previous week closing price.
Once the data is calculated, weekly return column for NIFTY50 is considered as “X” variable
and the weekly returns column for Apollo Tyre Ltd is considered as “Y” variable.

The model & formulas are :


Y = a +bX
X ̅ =∑X/N
Y ̅=∑Y/N
x = X – X ̅
y = Y – Y ̅
b=∑xy/∑(x)^2
a= Y ̅- bX ̅
e = Y – Y ̅
Variance of error=(σe)^2 =∑e^2/N-K
S.E of b = √ ((σe)^2 /∑x^2)
t stat of b =   b/ S.E of b
TSS=ESS+RSS
ESS = (b^2)*(∑x^2)
RSS = ∑e^2
R^2 = ESS/TSS
F = Mean ESS/Mean RSS

Data Analysis;

Using the Regression Add-on in Microsoft Excel Data Analytics tool we get following
values:

R Square:- R^2= 0.3477


a = 0.2486
b = 0.2286
N (Observations) = 50
F = 25.5959

Therefore formulating below equation:

Y = a +bX

Y = 0.2486 + 0.2286X

Result:-

The above equation tells us the relationship between “Y” and “X”, that is Demand and Price. If
price raises by unit, demand raises by 2.035 units. Positive sign says that, there is reverse
relationship. Means if price rises demand rises, similarly if price falls then demand also falls.
Figure In bracket is t-stat for “b”.e value for which is less than 0.05 so e is statistically significant
at 5%. R^2 = 0.2, which means 20% Y is explained by X. 80% error or other variables aren’t in
the models. F is 12.866. The P value for which is less than 0.05, overall model is statistically
significant at 5%

Conclusion:-

There is 66% error in the model and 34% model is correct.

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