Abstract The application of quantum algorithms has attracted much attention as it holds the promise of solving practical problems that are intractable to classical algorithms. One such application is the recent development of a quantum-walk-based optimization algorithm approach to portfolio optimization under the modern portfolio theory framework. In this paper, we demonstrate an experimental realization of the alternating phase-shift and continuous-time quantum walk unitaries that underpin this quantum algorithm using optical networks and single photons. The experimental analysis confirms that the probability of states corresponding to high-quality solutions is efficiently amplified by increasing the number of phase-shift and quantum walk iterations. This work provides strong evidence for practical applications of quantum-walk-based algorithms such as financial portfolio optimization.
Abstract The application of quantum algorithms has attracted much attention as it holds the promise of solving practical problems that are intractable to classical algorithms. One such application is the recent development of a quantum-walk-based optimization algorithm approach to portfolio optimization under the modern portfolio theory framework. In this paper, we demonstrate an experimental realization of the alternating phase-shift and continuous-time quantum walk unitaries that underpin this quantum algorithm using optical networks and single photons. The experimental analysis confirms that the probability of states corresponding to high-quality solutions is efficiently amplified by increasing the number of phase-shift and quantum walk iterations. This work provides strong evidence for practical applications of quantum-walk-based algorithms such as financial portfolio optimization.
This article proposes a new, more efficient quantum algorithm for portfolio optimization and uses quantum combinatorial optimization (QCO) techniques. The recent construction developed in 2021 has sparked the field of financial portfolio optimization through the Quantum Walk Optimization Algorithm (QWOA). We study the complexity and efficiency of quantum optimization algorithms with a special interest in QWOA. The objective is to minimize the risk of investing by having a good combination of assets in the portfolio. We also focus on reducing the number of iterations yet attaining a high-quality resolution through contraction of the solution space that eases computations. We extend QWOA’s idea by constructing a newly outperforming scheme known as ’Quantum Mix Optimization Algorithm (QMOA)’. QMOA algorithm codes are provided for the implementation and simulation of numerical results. In addition, QMOA’s efficiency (better than the existing QCO algorithms) is discussed. For instance, the least QWOA number of computations required to execute the initial state equation is p > 2 while this value is p ≥ 2 in the proposed QMOA.
This paper proposes a highly efficient quantum algorithm for portfolio optimisation targeted at near-term noisy intermediate-scale quantum computers. Recent work by Hodson et al. (2019) explored potential application of hybrid quantum-classical algorithms to the problem of financial portfolio rebalancing. In particular, they deal with the portfolio optimisation problem using the Quantum Approximate Optimisation Algorithm and the Quantum Alternating Operator Ansatz. In this paper, we demonstrate substantially better performance using a newly developed Quantum Walk Optimisation Algorithm in finding high-quality solutions to the portfolio optimisation problem.
Quantum annealing has emerged as a promising computational paradigm for solving large-scale combinatorial optimization problems that are intractable for classical algorithms. Financial portfolio optimization, which involves balancing expected returns against risk under multiple practical constraints, represents one of the most challenging optimization tasks in quantitative finance. Traditional approaches based on mean-variance theory, heuristic meta-optimization, and classical quadratic programming often struggle to scale efficiently as the dimensionality of assets and constraints increases. This study explores the application of quantum annealing techniques to financial portfolio optimization by formulating the problem as a quadratic unconstrained binary optimization model suitable for quantum hardware. The paper provides a systematic mapping of portfolio objectives and constraints into the Ising Hamiltonian framework and analyzes how quantum tunneling and probabilistic state transitions can enhance convergence toward near-global optima. Comparative insights between classical solvers and quantum annealing-based approaches are discussed in terms of solution quality, computational efficiency, and scalability. Furthermore, the study highlights current hardware limitations, embedding challenges, and noise effects that influence optimization performance. The findings indicate that quantum annealing offers substantial potential for accelerating portfolio optimization in high-dimensional financial systems, particularly in scenarios involving complex constraints and dynamic market conditions, thereby establishing a foundation for future quantum-driven financial decision-support systems.
Classical mean-variance optimization is powerful in theory but fragile in practice, often producing highly concentrated, high-turnover portfolios. Naive equal-weight (1/N) portfolios are more robust but largely ignore cross-sectional information. We propose a quantum stochastic walk (QSW) framework that embeds assets in a weighted graph and derives portfolio weights from the stationary distribution of a hybrid quantum-classical walk. The resulting allocations behave as a “smart 1/N” portfolio: structurally close to equal-weight, but with small, data-driven tilts and a controllable level of trading. On recent S&P 500 universes, QSW portfolios match the diversification and stability of 1/N while delivering higher risk-adjusted returns than both mean-variance and naive benchmarks. A comprehensive hyper-parameter grid search shows that this behavior is structural rather than the result of fine-tuning and yields simple design rules for practitioners. A 34-year, multi-universe robustness study with rolling re-optimization further demonstrates that the QSW optimizer preserves these advantages across market regimes. Overall, the QSW framework improves risk-adjusted performance while maintaining strong diversification and moderate turnover.
Portfolio optimization (PO) is extensively employed in financial services to assist in achieving investment objectives. By providing an optimal asset allocation, PO effectively balances the risk and returns associated with investments. However, it is important to note that as the number of involved assets and constraints increases, the portfolio optimization problem can become increasingly difficult to solve, falling into the category of NP-hard problems. In such scenarios, classical algorithms, such as the Monte Carlo method, exhibit limitations in addressing this challenge when the number of stocks in the portfolio grows. Quantum annealing algorithm holds promise for solving complex portfolio optimization problems in the NISQ era. Many studies have demonstrated the advantages of various quantum annealing algorithm variations over the standard quantum annealing approach. In this work, we conduct a numerical investigation of randomly generated unconstrained single-period discrete mean-variance portfolio optimization instances. We explore the application of a variety of unconventional quantum annealing algorithms, employing both forward annealing and reverse annealing schedules. By comparing the time-to-solution(TTS) and success probabilities of diverse approaches, we show that certain methods exhibit advantages in enhancing the success probability when utilizing conventional forward annealing schedules. Furthermore, we find that the implementation of reverse annealing schedules can significantly improve the performance of select unconventional quantum annealing algorithms.
Quantum computing offers new possibilities for solving combinatorial optimization problems with rapidly growing search spaces. Among emerging hardware platforms, photonic quantum computers based on boson sampling provide a promising approach for sampling-based optimization methods. In this work, we investigate the application of the Binary Bosonic Solver, a hybrid quantum-classical algorithm designed for photonic quantum processors, to the binary portfolio optimization problem derived from the classical mean-variance framework. In addition to evaluating the feasibility of solving such problems on photonic quantum hardware, we analyze the behavior of the Binary Bosonic Solver algorithm under different architectural and optimization parameters, including interferometer loop configurations and gradient estimation methods. Benchmark instances are generated using historical financial market data, and experiments are performed both on a photonic quantum computer simulator and on the ORCA PT-1 photonic quantum processor installed at Poznan Supercomputing and Networking Center, with results compared to those obtained using a classical optimization algorithm. The results demonstrate that portfolio optimization can be successfully executed on current photonic quantum hardware and that the Binary Bosonic Solver algorithm consistently produces feasible and high-quality solutions, highlighting the practical potential of photonic quantum computing for combinatorial optimization problems.