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"Problem Formulation"
- Problem Statement:
- Adapt traditional computing methods for finance for quantum computers
- Compare the efficiency of computational methods in finance using traditional vs quantum computers
- Duncker Diagram:
- Kepner-Tregoe Situtation Analysis:
- Timing:
- The global economy is based on various international financial asset markets. These markets are widely studied in order to try to capitalize in upward or downward swings in pricing in order to maximize returns on investments. Advancements in quantum computing technology poses to have substantial benefits in the analysis of various financial assets
- Trend:
- Market trends have been studied, researched, taught, and exploited all in the name of financial benefits, from the price of livestock to real estate, cryptocurrencies or stocks, options, and futures. Quantum computing could serve as the next generation of financial asset analysis in order to capitalize on the daily and long term trends in market pricing.
- Impact:
- On top of the benefit of potentially limitless financial gain due to novel asset analysis, the impact quantum computing could have on different industries where modeling, simulation, and analysis (such as medicine) is untold.
- Timing:
- KT Problem Analysis:
- What:
- Some knowledge of Python, C++, financial analysis techniques
- Observed the progression of quantum computing in various fields for novel modeling and simulation
- Constraints include the current stage of quantum computing hardware and availability
- The stock market is important not just for big banks and financial institutions, but many people depends on it for their financial security, wellbeing, and retirement
- Goals include converting current methods for quantum compatibility, creating a novel method of financial analysis, modeling, or simulation, or proving some level of quantum supremacy in the realm of financial analysis
- Classical computing will prove to be more efficient for the traditional methods of financial analysis used today
- Little knowledge of using quantum computers for financial analysis
- Relatively little research has been published regarding quantum asset analysis
- There is lots of available historical data for comparison upon completed analysis
- Random circumstance, such as COVID-19, have an effect on the stock market but for the initial analysis done, large events like this will be mainly ignored from the analysis
- Initially, the project will aim to research and compare quantum and classical methods as opposed to using the new methods to create significant returns on any investments
- Quantum computing, in theory, could prove to be invaluable for financial asset modeling, simulation, and analysis. It is unexpected that this proves to be entirely untrue
- KT Problem Analysis:
- When:
- Market and asset pricing analysis has been a common process since the earliest days of trading in human history
- The solution using quantum computing should be implemented as soon as possible in order to further the goal of QCs
- Quantum computing has been around for many decades, however great improvements in QC software have been very recent
- Within the last 5 years, major improvements to quantum computing hardware has been made
- There has always been some for of market analysis
- As quantitative trading and analysis becomes more apparently beneficial, this research will become more applicable and necessary
- No changes have yet been made to the project in its infancy
- No instruments have been calibrated yet
- KT Problem Analysis:
- Who:
- Professors at Stevens can provide guidance for the project scope and direction. The Quantum Lab at Stevens can also provide direction for the application of QCs
- The customer is any investor interested in financial analysis
- There is no team formed yet for the project
- Published research papers will serve as a major source of information regarding financial analysis, quantum computers, and QC's applications in finance
- All investors are affected by turns in the market and could stand to benefit from another analysis tool
- I do not have a deep understanding of the hardware of quantum computers but hope to learn more as the software is developed
- Many quant trading firms might be interested, but traditional firms may not
- Not all investors might be interested, but all may be affected by the outcome
- KT Problem Analysis:
- Where:
- The stock market is viewed around the world with iterations in many different countries and market turns affecting all countries
- The input of the software will be entirely dependent on the desired assets to be analyzed, regardless of asset class/type
- The quantum computing hardware is owned and operated by IBM, Microsoft, or whichever other online QC resource
- The product would be a desktop application which could be distributed online
- The customers could be anywhere in the world, as the market is watched around the world
- Various stock markets are intra-national exclusively
- Inputs could be individual assets (such as a stock price) or could be a list of assets (such as the S&P 500)
- No additional hardware will be sold/shipped with the software
- No physical devices will be shipped with the software
- Some institutions might not be technology forward and thus might not want more analytical software
- KT Problem Analysis:
- Why:
- The stock market is an investment opportunity that, even when in a global crisis such as COVID-19 causes interest rates to plummet, always has opportunity for return on investment. New analysis tools could prove to improve returns for investors of any size
- Quantum computers redesign how we think of electronic computation in a way conducive to large modeling and simulation needs. This aspects lends QCs well to the application in financial analysis
- As quant trading firms and methods are on the rise, more and more calculations will need to be done in less and less time. If QCs can save time in the analysis of financial assets, there will be more time to trade, especially in an industry where, quite literally, time is money.
- Quantum computers represent a novel method of financial analysis, not a new concept entirely. QCs are not an essential right now, but could prove to be the new standard for this type of analysis
- It is possible that classical computing analysis methods may be entirely unsuited for use with QCs and new analytical methods will need to be created
- KT Problem Analysis:
- How:
- Quantum computing financial analysis is related to both financial analysis and quantum computers and has yet to be deeply researched in ways that other computing technologies have in recent years
- A Python script will need to be developed to use QISKIT or in Microsoft's Q# and run via the corresponding APIs
- Financial analysis has been around for centuries, however quant trading firms have been arising slowly in the past few decades. Quantitative trading strategies are constantly being developed and re-worked.
- Quantum computing in financial analysis is unrelated to much of the work being done by Quant Trading firms right now as QCs are still highly unavailable for smaller institutions
- A dedicated quantum computer is not available and scripts will need to be run through APIs.
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