Grind candlenuts to a paste in a coffee grinder. Alternatively, candlenuts may be crushed using a mortar and pestle.
Combine all spice paste ingredients (including ground candlenut) in a bowl to form a paste.
In a medium sized pot, heat vegetable oil. Fry cinnamon stick, cardamom pods, and cloves for 1 to 2 minutes or until spices start to pop. Add onions, garlic, and ginger and fry for another 2 minutes. Then add spice paste and continue to cook for 4 to 5 minutes over medium heat. Stir constantly so that the spices do not burn.
Now, add chicken and continue to cook for another 4 to 5 minutes. Pour in water, cover, and bring to a boil. Reduce heat and allow it to simmer for 10 minutes.
Add salt and potatoes. Continue to cook for 10 to 15 minutes or until potatoes are tender.
Finally, stir in yogurt. Allow the sauce to heat through over low heat.
Turn off stove and let korma sit for 10 minutes before serving.
**Candlenuts may be substituted with macadamias or cashew nuts.