Quantum Device Solving QUBO for Portfolio Optimization
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Solution Overview
Problem
Existing methods for solving optimization problems, such as quadratic unconstrained binary optimization, are inefficient for real-time decision-making in asset portfolio management, particularly when historical financial data is limited, and classical computing devices struggle to provide timely solutions.
Innovation Solution
A method utilizing a quantum device to solve quadratic unconstrained binary optimization problems for trading trajectories, combined with a machine learning algorithm trained on historical data, to recommend optimal asset portfolio compositions for future periods based on historical and real-time financial data, even when complete data is not available.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If quantum device is used to solve QUBO problem for optimization, then solution speed and efficiency are improved, but device complexity increases
Solution Approach 1:
A machine learning model is introduced as an intermediary between the quantum device and the decision-making process. The quantum device solves QUBO problems to generate training data, the machine learning model learns from this data, and then provides recommendations. This intermediary approach allows the system to leverage quantum computing power while managing complexity through a more interpretable machine learning layer.
Solution Approach 2:
The system is divided into distinct modules: a quantum computing module for solving QUBO optimization problems, a machine learning module for learning from quantum-generated solutions, and a decision support module for providing recommendations. This segmentation allows each component to be optimized independently and managed separately, reducing overall system complexity while maintaining high productivity.
2Adaptability or versatility
If machine learning algorithm is trained on historical data to provide recommendations, then adaptability to future periods is improved, but data availability requirements increase
Solution Approach 1:
The system performs preliminary actions by using the quantum device to solve QUBO problems on historical data before actual decision-making is needed. This generates optimal solutions in advance that are used to train the machine learning model, allowing the model to be prepared and adapt to future periods without requiring complete historical data to be available at the time of prediction.
Solution Approach 2:
The machine learning model serves itself by learning patterns from quantum-generated optimal solutions. Once trained on the quantum-generated training set, the model can independently provide recommendations for future periods without requiring additional quantum computing resources or complete historical data, making the system self-sufficient after initial training.
Data Source
AI summary
A method comprising solving, by a quantum device, a QUBO problem defined by an equation with a cost function for optimization of trading trajectories of an asset portfolio based on historical financial data for a first period of time, providing a quantum or classical machine learning algorithm that provides a recommended composition of an asset portfolio based on a set of inputs, training the algorithm with financial data for a second period of time, and providing a recommended portfolio composition for the second period of time by running the trained machine learning algorithm.

