Trend Ratio-Based Portfolio Optimization Model Adopting Entanglement-enhanced Quantum-Inspired Evolutionary Computation in the Global Financial Markets

Financial management is a critical and complicated issue. People tend to invest in the stock market and expect a stable uptrend portfolio to spread the investment risk effectively. As global economies affect each other, investing in global markets is the best way to address systematic risk for effective financial management. Selecting an appropriate portfolio across global markets involves a substantial solution space; thus, an efficient and effective evolutionary computation is proposed. The novel entanglement-enhanced quantum-inspired optimization technique is proposed as an efficient mechanism to search for the relationship between stocks with high-dependency solutions. The novel indicator trend ratio aims to evaluate the investor-desired portfolio with a stable uptrend under a perfect balance between return and risk. Therefore, this study is the first attempt to evaluate the major global markets in the Group of Seven (G7) countries to expand the generality of trend ratio usage. The experiments demonstrate that the proposed novel approach has better and more precise searchability than other state-of-the-art optimization. The proposed intelligent model outperforms the Sharpe ratio, benchmark strategy, and index performance regarding the trend ratio, risk, maximum drawdown, and profit factor. The results reveal that risk dispersion substantially improves investment performance. Under the evaluation of the trend ratio, the proposed system integrates G7 markets as an expansion of a prospective avenue for global asset management,