Quantum machine learning offers a promising pathway for enhancing stock market prediction, particularly under complex, noisy, and highly dynamic financial environments. However, many classical forecasting models struggle with noisy input, regime shifts, and limited generalization capacity. To address these challenges, we propose a Quantum Temporal Convolutional Neural Network (QTCNN) that combines a classical temporal encoder with parameter-efficient quantum convolution circuits for cross-sectional equity return prediction. The temporal encoder extracts multi-scale patterns from sequential technical indicators, while the quantum processing leverages superposition and entanglement to enhance feature representation and suppress overfitting. We conduct a comprehensive benchmarking study on the JPX Tokyo Stock Exchange dataset and evaluate predictions through long-short portfolio construction using out-of-sample Sharpe ratio as the primary performance metric. QTCNN achieves a Sharpe ratio of 0.538, outperforming the best classical baseline by approximately 72\%. These results highlight the practical potential of quantum-enhanced forecasting model, QTCNN, for robust decision-making in quantitative finance.
Abstract In this paper, we investigate the application of quantum and quantum-inspired machine learning algorithms to stock return predictions. Specifically, we evaluate the performance of quantum neural network, an algorithm suited for noisy intermediate-scale quantum computers, and tensor network, a quantum-inspired machine learning algorithm, against classical models such as linear regression and neural networks. To evaluate their abilities, we construct portfolios based on their predictions and measure investment performances. The empirical study on the Japanese stock market shows the tensor network model achieves superior performance compared to classical benchmark models, including linear and neural network models. Though the quantum neural network model attains the lowered risk-adjusted excess return than the classical neural network models over the whole period, both the quantum neural network and tensor network models have superior performances in the latest market environment, which suggests capability of model’s capturing non-linearity between input features.
Numerous studies have analyzed the use of hybrid quantum-classical convolutional neural networks as a promising alternative to classical deep learning. However, network components on quantum hardware impose fundamental limitations, while the scalability of quantum circuits leads to trainability issues. In this work, we investigate whether small, classically-emulated quantum circuit components can play a meaningful role within complex models, offering an alternative to purely classical convolutional architectures. To this end, we present a systematic study of the effectiveness of a Hybrid Quantum-inspired Convolutional Neural Network (HQiCNN) compared with a parameter-matched classical Convolutional Neural Network (CNN) that differs only in an intermediate dense neural layer. Both models are evaluated on two real-world medical datasets while systematically varying the different hyperparameters, ensuring a fair model comparison that is both dataset and hyperparameter independent. The results show that no architecture consistently dominates the other: the HQiCNN achieves its largest gains in intermediate-data regimes, whereas the CNN reaches the highest accuracies for the largest training sets in both datasets. Furthermore, removing entanglement produces comparable performance while enabling substantially better scalability of quantum simulations, and richer observable sets become beneficial only when sufficient training data are available. Finally, we propose two SHAP-based explainability tools for comparing the predictions between both models,
∣SHAP∣IoU and
EMDpos metric, to demonstrate that both architectures consistently attend to anatomically plausible regions. Thus, we provide a comprehensive benchmark showing that, under certain conditions, hybrid quantum-inspired models are an alternative that can offer benefits in practical tasks such as medical image classification.