As the number of assets in the portfolio multiplies, the difficulty of the calculation exponentially increases, and the problem can quickly become intractable, even to the world’s largest supercomputers. Quantum computing, on the other hand, offers the possibility of running multiple calculations at once thanks to a special quantum state that is adopted by quantum bits, or qubits. Quantum systems, for now, cannot support enough qubits to have a real-world impact. But in principle, large-scale quantum computers could one day solve complex portfolio optimization problems in a matter of minutes – which is why the world’s largest banks are already putting their research team to work on developing quantum algorithms. To translate Markowitz’s classical model for the portfolio selection problem into a quantum algorithm, the DTU’s researchers formulated the equation into a quantum model called a quadratic unconstrained binary optimization (QUBO) problem, which they based on the usual criteria used for the operation such as budget and expected return.
Source: Are quantum computers good at picking stocks? This project tried to find out | ZDNet
Robert Richardson 