PAAS

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Pan American Silver Corp.


Trends, Exposure, and Leverage
It is probable that if you are considering purchasing PAAS, you want to profit on the increase in the price of silver. Therefore, you would most likely prefer to see if PAAS does indeed move along with silver, and how strong silver's influence really is. In other words - you want to know how much exposure does PAAS have to silver. The answer differs depending on your perspective. After all - if you want to hold your position for just a week or so, PAAS's performance in 2006 doesn't matter to you. Conversely, if you want to purchase stocks for a year or so, then taking older data into account is essential. Either way, if you want to check PAAS's performance relative to silver, one of the best approaches is to create a trendline that best describes stock's performance, and examine it. The more it "fits" the data, the more silver "determined" the price of PAAS in the past (thus is likely to do so also in the future).
How can you measure and compare to other stocks the way trendline "fits" the data? With the R-square coefficient - the bigger it is, the more trendline "fits" the data, and consequently the more exposure PAAS has to silver. Therefore, the stocks with higher R-square value are generally preferred to those with lower R-square values. How high R-square value is "high enough"? There are several rules on that and we implemented them for you, so that you can read the whole analysis. All of the above may sound complex, and the calculations behind our models and charts certainly are, but that doesn't mean that it can't be easy to use! In fact, the idea behind this section was to make sophisticated analysis as understandable and usable, as possible.
There is one more thing that needs to be covered before presenting our charts to you - the analysis of the PAAS and silver would not be complete without mentioning the leverage factor. Generally, I believe that you want your silver stock to magnify silver's gains. Fortunately this can also be inferred from the trendline analysis. Based on the shape of the trendline, we can estimate if PAAS does indeed give you the biggest bang for the buck in your preferred time-frame. Again, although the simulation is a sophisticated process, we do it for you and provide you with an easy-to-use interpretation.
Here's how you can enjoy this cutting-edge analysis in just a few super-easy steps:
1. Decide if you wish to buy-and-hold (use the first chart) or trade (use the second chart)
2. If you decided to trade, choose which time-frame describes your trading style (the solid trendline describes the medium term, and the dashed one describes the short term)
3. Check out the chart for an overview of PAAS's performance relative to silver. Click on the chart to enlarge it.
4. Read the description/interpretation of the chart below it, and decide if PAAS meets your requirements.
5. Compare it to other stocks and make appropriate investment/trading decisions.
Naturally, you are welcome to analyze these charts in any other way.
Buy-and-Hold Perspective
(if you plan to hold your stocks for more than 6 months)
PAAS Long Term Scatter Chart with Trend Relative to Silver
Click on the above chart to enlarge it
PAAS Long Term Exposure and Leverage to Silver
Trader's Perspective
(focus on solid trendline if you plan to hold your stocks between 2 and 6 months)
(focus on dashed trendline if you plan to hold your stocks for less than 2 months)
PAAS Short Term Scatter Chart with Trend Relative to Silver
Click on the above chart to enlarge it
PAAS Short Term Exposure and Leverage to Silver
Under- and Overvaluation
The above charts are great if you want to focus on PAAS's historical performance to decide whether to own it or not. Although they contain also this information, it is not very convenient to use them to check if a particular stock is under- or overvalued with regard to its historical performance relative to silver. In other words - the trendline from the above charts describes the AVERAGE values of PAAS at given silver prices, so when PAAS trades above the value from the trendline, one can say that it is overvalued. Conversely, when PAAS's price is lower than what one would expect it to be based on the trendline and today's silver price, then one can say that PAAS is undervalued.
One of the strategies to use this information and make the most of your silver investments is to purchase stocks when they are undervalued, and sell when they are overvalued. Another strategy (if you're risk averse and want to stay in the precious metals market at all times) is to switch from overvalued silver stocks to silver and re-purchase them once they become undervalued to the metal. It is advised for buy-and-hold Investors to rebalance their portfolios on a regular basis - selling overvalued stocks to buy undervalued ones might be a very profitable idea.
Not only do we provide you with a convenient way to check current status (under- or overvaluation) of PAAS and other gold/silver stocks, but we also tell you what will the "fair" (meaning the one from the trendline, that is not over- nor undervalued to silver) value of PAAS be if silver moves up or down to a certain level. And yes - all calculations/charts are updated on a daily basis.
Buy-and-Hold Perspective
(if you plan to hold your stocks for more than 6 months)
PAAS Long Term Line Chart
Click on the above chart to enlarge it
Medium-term Trader's Perspective
(if you plan to hold your stocks between 2 and 6 months)
PAAS Medium Term Line Chart
Click on the above chart to enlarge it
Short-term Trader's Perspective
(if you plan to hold your stocks for less than 2 months)
PAAS Short Term Line Chart
Click on the above chart to enlarge it
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Silver Stocks
CDE HL PAAS SLW SSRI SVM.TO