Table of Contents

Analysis of Variance (ANOVA) ....................................................................................................................... 1

Cement Industry ....................................................................................................................................... 1
ACC Cements ......................................................................................................................................... 1
Simple Linear Regression .............................................................................................................................. 2
Cement Industry ....................................................................................................................................... 2
ACC Cements ......................................................................................................................................... 2
Multiple Linear Regression ........................................................................................................................... 2
Cement Industry ....................................................................................................................................... 2
ACC Cements ......................................................................................................................................... 2
Chi-square Analysis ....................................................................................................................................... 4
Cement industry........................................................................................................................................ 4
ACC Cements ......................................................................................................................................... 4

Analysis of Variance (ANOVA)

Cement Industry

ACC Cements
Null Hypothesis: There is no significant difference between the returns of the company year on
year
H0: 1= 2= 3

Alternate Hypothesis: There is significant difference between the returns of the company year
on year
H1: 1 23

Level of Significance: 5%
Type I error: (Reject H0/ not reject H0)
= P (1 23/ 1= 2= 3) = 0.05
Type II error: (Not reject H0/ reject H0)
= P (1= 2= 3/ 1 23) =
Test Statistic:
Under H0,
F0= Between Variance/Within Variance
P value= 0.0752
Conclusion: Since p>, H0 is not rejected. Therefore there is no significant difference between
the returns of ACC on year on year basis.

Simple Linear Regression

Cement Industry

ACC Cements
Correlation: Since the correlation is very low i.e. 0.1940 (19.4%), one cannot proceed further to
build the model. Hence it can be said that there is no correlation between the share prices of
ACC and volume traded by ACC.

Multiple Linear Regression

Cement Industry

ACC Cements
Correlation: The adjusted r2 is negative and the multiple correlation is low but there exists a
significant difference between the competing companies of ACC and ACC.
Model: Y= 0+ 1X1+ 2X2+ 3X3+ 4X4+ 5X5
We use the method of least squares to obtain the best estimate for the regression coefficients.
By using the method of least squares, the model built is,
Y= 1449.11+0.0632 X1-0.1775 X2-0.2915 X3+1.6923 X4-0.827 X5
Assumptions:
1. Expected value of is zero
2. are uncorrelated
3. are normally distributed
4. has constant variances
5. All the regressive variables are independent
Testing significance of the model:
From the ANOVA table we can note that the p value is less than , the model built is significant.
Testing the significance of regression co-efficients:
Under this we test the significance of each regression co-efficient to the model constructed. For
this purpose we use a t-test.
Hypothesis 1: H0: 1=0, H1: 20
Since p value is greater than (p>), we conclude that hypothesis is not rejected. The
contribution is not significant.
Hypothesis 2: H0: 2=0, H1: 20
Since p value is greater than (p>), we conclude that hypothesis is not rejected. The
contribution is not significant.
Hypothesis 3: H0: 3=0, H1: 30
Since p value is greater than (p>), we conclude that hypothesis is not rejected. The
contribution is not significant.
Hypothesis 4: H0: 4=0, H1: 40
Since p value is less than (p<), we conclude that hypothesis is rejected. The is
significant contribution from the fourth regressor.
Hypothesis 5: H0: 5=0, H1: 50
Since p value is less than (p<), we conclude that hypothesis is rejected. The is
significant contribution from the fourth regressor.
Re-building the model:
Since there are variables that are not contributing significantly to the model, one has to rebuild
the model by deleting those variables.
After deleting the insignificant variables one gets the final model. The model rebuilt is
Y= 1587.64+1.37552X1-0.1742X2
Testing the significance of rebuilt model:
Since p<, the model rebuilt is significant.
Testing the significance of regression co-efficients:
Since the p values are less than , the contributions made by regression co-efficients is significant.
Testing the assumptions:
1. Expected value of is zero
2. are uncorrelated (Satisfies Durbin Watson test)
3. are normally distributed
4. has constant variances
5. All the regressive variables are independent
Conclusion: Since the model built is significant and satisfies all the assumptions it can be said that
Sun Pharmaceuticals and Glaxosmithkline have an impact on ACC Cements.

Chi-square Analysis
Cement industry

ACC Cements

Research Hypothesis: Is there any difference between positive and negative sigma limits.
Null hypothesis: There is no significant difference between positive and negative sigma limits.
H0: A & B are independent
Alternate hypothesis: There is significant difference between positive and negative sigma limits.
H1: A & B are dependent
Sample size: 123
Assumptions:
1. The sample is a random sample
2. The sample is large enough
3. Categorization is mutually exclusive
Level of significance: 5%
Type I error: (Reject H0/ not reject H0)
= P (A& B are dependent/ A & B are independent) = 0.05
Type II error: (Not reject H0/ reject H0)
= P (A & B are independent/ A & B are dependent)
Construction of test statistic
Under H0,
( )2
2 =

Observed Frequency

Positive Negative
Above 0 19
Below 15 0
Within 44 45
Expected Frequency

Positive Negative
Above 9.11 9.89
Below 7.2 7.8
Within 42.7 46.3

2=33.86

Critical value= 5.99147

Conclusion: Since H0 is rejected, A & B are not independent. Therefore there is significant
difference between positive and negative sigma limits of share prices of ACC Cements.