What’s typical finance problem?
|Financial Problem||Broad Approach Solution||Comments|
|Which assets should be included in a optimum portfolio? How should the composition of the portfolio change according to what happens in the market?||Optimization models||Deep learning, Heaton et al.|
|How to detect opportunities in the dfifferent assets in the market, and take profit by trading with them||Machine learning methods, including neural networks and deep learning|
|How to estimate the risk and return of a portfolio, or even a company||Mote Carlo-based methods|
Steps of a Quantum Algo
In general, a quantum algorithm is a sequence of five steps:
- Encode the input data into the state of a set of qubits.
- Bring the qubits into superposition over many states (i.e., use quantum superposition).
- Apply an algorithm (or oracle) simultaneously to all the states (i.e., use quantum entanglement amongst the qubits); at the end of this step, one of these states holds the correct answer.
- Amplify the probability of measuring the correct state (i.e., use quantum interference).
- Measure one or more qubits.
Specific Use Cases
The problem of what option is worth can be solved, in simple instances, by closed form formula. However, in general, the exotics/complex product requires numerical simulation methods (such as Monte Carlo).