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Entropy
Volume 25
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10.3390/e25020323
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Article

Toward Prediction of Financial Crashes with a D-Wave Quantum Annealer

by
Yongcheng Ding
1,2,3,
Javier Gonzalez-Conde
2,4,5,*,
Lucas Lamata
6,7,
José D. Martín-Guerrero
8,9,
Enrique Lizaso
10,
Samuel Mugel
10,
Xi Chen
2,5,
Román Orús
10,11,12,
Enrique Solano
1,12,13 and
Mikel Sanz
2,4,12,14
1
International Center of Quantum Artificial Intelligence for Science and Technology (QuArtist) and Department of Physics, Shanghai University, Shanghai 200444, China
2
Department of Physical Chemistry, University of the Basque Country UPV/EHU, Apartado 644, 48080 Bilbao, Spain
3
ProQuam Co., Ltd., Shanghai 200444, China
4
Quantum Mads, Uribitarte Kalea 6, 48001 Bilbao, Spain
5
EHU Quantum Center, University of the Basque Country UPV/EHU, Apartado 644, 48080 Bilbao, Spain
6
Departamento de Física Atómica, Molecular y Nuclear, Universidad de Sevilla, 41080 Sevilla, Spain
7
Instituto Carlos I de Física Teórica y Computacional, 18071 Granada, Spain
8
IDAL, Electronic Engineering Department, University of Valencia, Avgda. Universitat s/n, 46100 Burjassot, Spain
9
ValgrAI: Valencian Graduated School and Research Network of Artificial Intelligence, Camí de Vera, s/n, Edificio 3Q, 46022 Valencia, Spain
10
Multiverse Computing, Pio Baroja 37, 20008 San Sebastián, Spain
11
Donostia International Physics Center, Paseo Manuel de Lardizabal 4, 20018 San Sebastián, Spain
12
IKERBASQUE, Basque Foundation for Science, Plaza Euskadi 5, 48009 Bilbao, Spain
13
Kipu Quantum, Greifswalderstrasse 226, 10405 Berlin, Germany
14
Basque Center for Applied Mathematics (BCAM), Alameda de Mazarredo 14, 48009 Bilbao, Spain
 
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Entropy 2023, 25(2), 323; https://doi.org/10.3390/e25020323
Submission received: 12 January 2023 / Revised: 3 February 2023 / Accepted: 5 February 2023 / Published: 10 February 2023
(This article belongs to the Special Issue Quantum Control and Quantum Computing)
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Abstract

The prediction of financial crashes in a complex financial network is known to be an NP-hard problem, which means that no known algorithm can efficiently find optimal solutions. We experimentally explore a novel approach to this problem by using a D-Wave quantum annealer, benchmarking its performance for attaining a financial equilibrium. To be specific, the equilibrium condition of a nonlinear financial model is embedded into a higher-order unconstrained binary optimization (HUBO) problem, which is then transformed into a spin-1/2 Hamiltonian with at most, two-qubit interactions. The problem is thus equivalent to finding the ground state of an interacting spin Hamiltonian, which can be approximated with a quantum annealer. The size of the simulation is mainly constrained by the necessity of a large number of physical qubits representing a logical qubit with the correct connectivity. Our experiment paves the way for the codification of this quantitative macroeconomics problem in quantum annealers.
Keywords: quantum computation; financial networks; adiabatic quantum optimization quantum computation; financial networks; adiabatic quantum optimization

Share and Cite

MDPI and ACS Style

Ding, Y.; Gonzalez-Conde, J.; Lamata, L.; Martín-Guerrero, J.D.; Lizaso, E.; Mugel, S.; Chen, X.; Orús, R.; Solano, E.; Sanz, M. Toward Prediction of Financial Crashes with a D-Wave Quantum Annealer. Entropy 2023, 25, 323. https://doi.org/10.3390/e25020323

AMA Style

Ding Y, Gonzalez-Conde J, Lamata L, Martín-Guerrero JD, Lizaso E, Mugel S, Chen X, Orús R, Solano E, Sanz M. Toward Prediction of Financial Crashes with a D-Wave Quantum Annealer. Entropy. 2023; 25(2):323. https://doi.org/10.3390/e25020323

Chicago/Turabian Style

Ding, Yongcheng, Javier Gonzalez-Conde, Lucas Lamata, José D. Martín-Guerrero, Enrique Lizaso, Samuel Mugel, Xi Chen, Román Orús, Enrique Solano, and Mikel Sanz. 2023. "Toward Prediction of Financial Crashes with a D-Wave Quantum Annealer" Entropy 25, no. 2: 323. https://doi.org/10.3390/e25020323

APA Style

Ding, Y., Gonzalez-Conde, J., Lamata, L., Martín-Guerrero, J. D., Lizaso, E., Mugel, S., Chen, X., Orús, R., Solano, E., & Sanz, M. (2023). Toward Prediction of Financial Crashes with a D-Wave Quantum Annealer. Entropy, 25(2), 323. https://doi.org/10.3390/e25020323

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