Psychosis is when a person does not understand the reality of his/her situation. For example, a schizophrenic who is admitted to a psychiatric clinic is asked why that is the case. Normally the schizophrenic does not know the reason why, so he/she comes up with what they believe is the reason, which almost to 99% is the wrong reason, hence he/she is psychotic, or else he/she depict a rather strange and incomplete story because it is to embarrassing.
Paranoid psychosis can be inturpreted as a phobia that becomes activated 100% or more probably as anxiety resulting from inexplainable behaviour. A schizophrenic can not comprehand to persecute an individual to the degree that he becomes paranoid.