BUSINESS MATHEMATICS

AND
STATISTICS PROJECT

Submitted to:
Dr. Gulshan Kumar

Submitted by:
Shubham Goyal
Class: B.COM/LLB
(4TH semester)
Roll No.: 153/11

REGRESSION
The technique of regression is considered to be the most useful
statistical tool. It is helpful in making quantitative predictions in
business in the behavior of the related variables. The main uses of
regression analysis are:
(1)
Prediction of Unknown Value: The regression analysis
technique is very useful in predicting the probable value of an
unknown variable in response to some known related variable.
(2)
Nature of Relationship: The regression device is useful in
establishing the nature of relationship between two variables.
(3)
Estimation of Relationship: Regression analysis is
extensively used for the measurement and estimation of the
relationship among variables. It is an important statistical device
which provides basis for analysis and interpretation in research
studies.
(4)
Calculation of co-efficient of determination: The regression
analysis provides regression co-efficients which are generally used
in calculation of co- efficients of correlation. The square of coefficient of correlation is called the co- efficient of determination
which measures the degree of association that exists between two
variables.
(5)
Helpful in calculation of error: regression analysis is very
helpful in estimating the error involved in using the regression lines
as a basis for estimation.

Despite all utilities, the regression analysis, too, has various

limitations. They are:
1. Assumption of linear relationship: Regression analysis is based on
the assumption that there always exists linear relationship
between related variables. The linear type of relationship does not
always exist in the field of social sciences.
2. Assumption of Static condition: While calculating the regression
equations a static condition of relationship between the variables
is presumed. It is supposed that the relationship has not changed
since the regression equation was computed. Such type of
assumption has made the regression analysis a static one.
3. Study of relationship in prescribed limits: The linear relationship
between the variables can only be ascertained within limits. When
prescribed limits are crossed, the results become incorrect and
inconsistent.

METHODOLOGY

Under the normal equation method, computation of regression

equations is done by solving two normal equations.
Regression Equation of Y on X:
We know, regression equation of Y on X is expressed as follows:
Y = a + b.X
Where, Y = dependent variable;
X = Independent variable;
a = Y- intercept;
b = X- intercept.
Under the normal equation method the values of a and b is obtained by
using the following two normal equations:
Y = Na+bX
XY=aY + bX2

DATE
31-Jan-13
30-Jan-13
29-Jan-13
28-Jan-13
25-Jan-13
24-Jan-13
23-Jan-13
22-Jan-13
21-Jan-13
18-Jan-13
17-Jan-13
16-Jan-13
15-Jan-13
14-Jan-13
11-Jan-13
10-Jan-13
09-Jan-13
08-Jan-13
07-Jan-13
04-Jan-13
total

sensex(X)
19894.98
20,005.00
19,990.90
20,103.35
20,103.53
19,923.53
20,026.61
19,981.57
20,101.82
20,039.04
19,964.03
19,817.63
19,986.82
19,906.41
19,663.64
19,663.55
19,666.59
19,742.52
19,691.42
19,784.08
398,057.02

T C S(Y1) S B I(Y2)
1342.75
2436.6
1343.85
2435.4
1342.5
2457.3
1343.65 2490.15
1337.8
2513.25
1325.75
2458.4
1311.85
2480.3
1315.75 2464.35
1331.6
2497.75
1351.15
2491.2
1362.25 2468.35
1348.1
2432.9
1334.3
2488.9
1334.3
2498.25
1306.35 2490.95
1258.55
2539.2
1275.75 2521.65
1298.3
2493.45
1290.55
2467
1297.5
2484.8
26452.6 49610.15

RECAPITAL(Y3)
474.8
470.95
468.45
476.95
475.75
464.1
479.5
483.95
490
480.55
478.85
479.9
496.1
494.9
479.65
494.2
497.55
501.65
501.35
501.7
9690.85

DAILY DATA OF VALUE OF SHARES OF STOCKS IN INDIAN STOCK MARKET

AND THREE OTHER COMPANIES.

FITTING REGRESSION EQUATION OF Y1 ON X:

DATE
sensex(X)
T CS(Y1) X.X
X.Y1
31-Jan13
26713984.4
19894.98 1342.75
395810229.2
30-Jan13
26883719.25
20,005.00 1343.85
400,200,025.00
29-Jan13
19,990.90 1342.5
399,636,082.81
26837783.25
28-Jan13
27011866.23
20,103.35 1343.65
404,144,681.22
25-Jan13
26894502.43
20,103.53 1337.8
404,151,918.46
24-Jan13
26413619.9
19,923.53 1325.75
396,947,047.66
23-Jan13
26271908.33
20,026.61 1311.85
401,065,108.09
22-Jan13
26290750.73
19,981.57 1315.75
399,263,139.66
21-Jan13
26767583.51
20,101.82 1331.6
404,083,167.31
18-Jan13
27075748.9
20,039.04 1351.15
401,563,124.12
17-Jan13
27195999.87
19,964.03 1362.25
398,562,493.84
16-Jan13
19,817.63 1348.1
392,738,458.82 26,716,147.0030
15-Jan13
26668413.93
19,986.82 1334.3
399,472,973.71
14-Jan13
26561122.86
19,906.41 1334.3
396,265,159.09
11-Jan13
25687596.11
19,663.64 1306.35
386,658,738.05
10-Jan13
24747560.85
19,663.55 1258.55
386,655,198.60
09-Jan13
25089652.19
19,666.59 1275.75
386,774,762.23
08-Jan13
25631713.72
19,742.52 1298.3
389,767,095.95
07-Jan13
25412762.08
19,691.42 1290.55
387,752,021.62
04-Jan13
25669843.8
19,784.08 1297.5
391,409,821.45
Total
526542279.3
398,057.02 26452.6 7,922,921,247.00

Regression equation of Y on X is
Y = a+bx
The two normal equations are :
Y2 = N.a + bx
XY = a.x + bY2
Substituting the value we get,
26452.6 = 20(a) + b(398057.02)
526542279.3 = a.398057.02 + b 7922921247
Multiply (1) by 19902.851 and subtracting it from (2)
526482156.3626 = 398057.02(a) + 7922469558.56
(-)526482156.3626

=(-) a. 398057.02 +(-) b 7922921247

-47382156.3626 = b 784323548311.56
-0.6042072985 = b
Therefore, the value of b = -0.6042072985
Putting the value of b in equation (1)
26452.6 = 20a + 240508.95
-214056.35 = 20a
a = 10702.81

FITTING REGRESSION EQUATION OF Y2 ON X:

DATE
sensex(X)
S B I(Y2) X.X
X.Y2
31-Jan13
2436.6
19894.98
395810229.2 96952216.54
30-Jan13
2435.4
48720177
20,005.00
400,200,025.00
29-Jan13
19,990.90
2457.3
399,636,082.81 49,123,638.57
28-Jan13
50060357
20,103.35 2490.15
404,144,681.22
25-Jan13
20,103.53 2513.25
404,151,918.46 26894502.43
24-Jan13
2458.4
19,923.53
396,947,047.66 48980006.15
23-Jan13
2480.3
20,026.61
401,065,108.09 49672000.78
22-Jan13
19,981.57 2464.35
399,263,139.66 26290750.73
21-Jan13
20,101.82 2497.75
404,083,167.31 50209320.91
18-Jan13
2491.2
20,039.04
401,563,124.12 49921256.45
17-Jan13
19,964.03 2468.35
398,562,493.84 49278213.45
16-Jan13
2432.9
19,817.63
392,738,458.82 48214312.03
15-Jan13
2488.9
19,986.82
399,472,973.71 26668413.93
14-Jan13
19,906.41 2498.25
396,265,159.09 49731188.78
11-Jan13
19,663.64 2490.95
386,658,738.05 48981144.06
10-Jan13
2539.2
19,663.55
386,655,198.60 49929686.16
09-Jan13
19,666.59 2521.65
386,774,762.23 49592256.67
08-Jan13
19,742.52 2493.45
389,767,095.95 49226986.49
07-Jan13
2467
19,691.42
387,752,021.62 48578733.14
04-Jan13
2484.8
19,784.08
391,409,821.45 49159481.98
Total
398,057.02 49610.15 7,922,921,247.00 966184643.3

Regression Equation Y on X
Y = a+bx
The two normal equations are :
Y2 = N.a + bx
XY = a.x + bY2
Substituting the value we get,
49610.15 =

20a

b 398057.02

9661846643.3 = a. 398057.02 + b 7922921247

Multiply (1) by 19902.851 and subtracting it from (2)
987383423.53765 = 398057.02a + b7922469558.56402
966184643.3

= 398057.02 a+ b7922921247

21198780.23765 = - 451688.43598b
b = 46.9323067607
therefore, the value of b = 46.9323067607
Putting the value of b in equation (1)
49610.15 = 20a + 18681734.1708901
-18632124.0208901 = 20a
a = -931606.201044505

FITTING REGRESSION EQUATION OF Y3 ON X:

DATE
sensex(X)
RECAPITAL(Y3) X.X
X.Y3
31-Jan13
474.8
9446136.504
19894.98
395810229.2
30-Jan13
470.95
9421354.75
20,005.00
400,200,025.00
29-Jan13
468.45
9364737.105
19,990.90
399,636,082.81
28-Jan13
476.95
9588292.783
20,103.35
404,144,681.22
25-Jan13
20,103.53
475.75
404,151,918.46
9564254.398
24-Jan13
464.1
9246510.273
19,923.53
396,947,047.66
23-Jan13
479.5
9602759.495
20,026.61
401,065,108.09
22-Jan13
483.95
9670080.802
19,981.57
399,263,139.66
21-Jan13
490
9849891.8
20,101.82
404,083,167.31
18-Jan13
20,039.04
480.55
401,563,124.12
9629760.672
17-Jan13
478.85
9559775.766
19,964.03
398,562,493.84
16-Jan13
479.9
9510480.637
19,817.63
392,738,458.82
15-Jan13
496.1
9915461.402
19,986.82
399,472,973.71
14-Jan13
494.9
9851682.309
19,906.41
396,265,159.09
11-Jan13
479.65
9431664.926
19,663.64
386,658,738.05
10-Jan13
494.2
9717726.41
19,663.55
386,655,198.60
09-Jan13
497.55
9785111.855
19,666.59
386,774,762.23
08-Jan13
501.65
9903835.158
19,742.52
389,767,095.95
07-Jan13
501.35
9872293.417
19,691.42
387,752,021.62
04-Jan13
501.7
9925672.936
19,784.08
391,409,821.45
Total
9690.85 7,922,921,247.00
1928574283
398,057.02

Regression Equation Y on X
Y = a+bx
The two normal equations are :
Y2 = N.a + bx
XY = a.x + bY2
Substituting the value we get,
9690.85 =

a. 20 +

b 398057.2

1928574283 = a. 398057.02 + b 7922921247

Multiply (1) by 19902.851 and subtracting it from (2)
192875543.61335 = 398057.02a + b 7922473141.0772
(-)1928574283

= (-)398057.02a +(-) b 7922921247

-1735698739.38665 = -b 448105.92228
b = 3873.4117338622
Putting the value of b in equation (1)
9690.85 = 20a + 1541839429.22833
a = -77091486.9189165

Date

Adj Close*

7 Feb, 2013

19,540.08

6 Feb, 2013

19,611.27

5 Feb, 2013

19,631.97

4 Feb, 2013

19,728.21

1 Feb, 2013

19,736.45

(I) REGRESSION EQUATION OF Y1 ON X IS:

Y= 10702.81 0.6042072985 X
Putting the values of X in the above equation, the next five value of Y are :-

(i)

Y = 10702.81 0.6042072985 ( 19736.45)

Y = 1222.0971364803
Y = 10702.81- 0.6042072985 ( 19728.21)

(ii)

= 1217.1184683407
(iii)

Y=10702.81 0.6042072985(19631.97)
=1158.969557933

(iv)

Y= 10702.81 0.6042072985(19,611.27)
=1146.4624668541

(v)

Y = 10702.81 0.6042072985(19540.08)
Y = 1103.4489492739

(II) REGRESSION EQUATION OF Y2 ON X IS:

Y = -931606.201044505 + 46.9323067607 X

Putting the values of X in the above equation, the next five value of Y are :(i)

Y = -931606.201044505 + 46.9323067607 ( 19,736.45)

=1857883.32681172

(ii)

Y = -931606.201044505 + 46.9323067607 (19,728.21)

=1857496.60460401

(iii)
(iv)
(v)

Y = -931606.201044505 + 46.9323067607 (19631.97)

=1852979.83940136
Y = -931606.201044505 + 46.9323067607 (19,611.27)
=1851830.34710382
Y = -931606.201044505 + 46.9323067607 (19540.08)
=1707870.30945102

(III) REGRESSION EQUATION OF Y3 ON X IS:

Y = -77091486.9189165 +3873.4117338622X
Putting the values of X in the above equation, the next five value of Y are :(i)
(ii)
(iii)
(iv)
(v)

Y = -77091486.9189165 +3873.4117338622(19736.45)
= 153538883.933701
Y=-77091486.9189165 +3873.4117338622(19728.21)
=153506967.021014
Y=-77091486.9189165 +3873.4117338622(19631.97)
=153134189.875747
Y=-77091486.9189165 +3873.4117338622(19611.21)
=153053777.848152
Y=-77091486.9189165 +3873.4117338622(19540.08)
=152778262.071522

CONCLUSION
From the above calculations done and projections made, we can conclude that(i)
(ii)
(iii)

When there will be fall in sensex, the share price of TCS will also fall, but the fall in
share prices is less than the fall in sensex.
When there will be fall in sensex, the share price of SBI will also fall, but the fall in
share prices is more than the fall in sensex.
When there will be fall in sensex, the share price of Reliance capital will also fall, but
the fall in share prices is more than the fall in sensex.