Quantum Finance

The core nature of finance is to deal with the uncertainty in the future behaviour of a financial instrument and return or risk it may have in the future. The concept of risk computes the possibility that the actual return of the asset may differ from the expected return. This states the volatility i.e., the degree of fluctuations in the trading price series over time, as measured by the standard deviation of returns.

We may all eviate the risk of holding asset by carefully selecting other assets to invest in,and creating optimal portfolio, an interesting problem arises here is how to construct this optimal portfolio and modify it depending on the conditions of the market?These are tasks which are particularly hard for conventional computers but can be solved by using quantum computing methods.

The finance personals are always looking for ways to overcome the resulting performance issues that arise particularly when pricing options.This has led to research that applies alternative computing techniques to finance,i.e.,Quantum finance which is an interdisciplinary research field, applying theories and methods developed by quantum physicists and economists in order to solve problems in finance. Quantum finance,along with artificial intelligence tools aided by quantum computing,is the future of finance.

Quantum finance is essentially an integration of Quantum Theory and Computational Finance. The Quantum field theory provides the theoretical foundation for applying Quantum finance,and Computational finance models provide the system framework for applications.

It was developed as an interdisciplinary subject in the 1990s. It applied quantum mechanics and quantum field theory to theoretical economics ushering in a new branch of study called econophysics. The first published work on econophysics was by Professors R. Mantegna and E. Stanley in 1999. Baaquieis the first scholar to develop the theory of Quantum finance using the Quantum field theory.

-Prof.RamyaHP,
AssistantProfessor,
DSCE-MBA

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