Here is a quick tutorial in python to compute Correlation Matrix between multiple stock instruments using python packages like NSEpy & Pandas. Generally Correlation Coefficient is a statistical measure that reflects the correlation between two stocks/financial instruments. Determining the relationship between two securities is useful for analyzing intermarket relationships, sector/stock relationships and sector/market relationships.

Here are some of the essential python libraries required for Correlation Matrix Data Visualization

**IPython** (Interactive Python)

**Pandas** (Python Library to handle time series data )

**NSEpy** (Fetch Historical data from NSEindia – NSEpy 0.3 ver or higher)

**Matplotlib** (Python library to handle 2D plotting)

**Import the required python modules**

i)from nsepy.archives we need to import the get_price_history:-for fetching the stock pricing details

ii) from datetime import we need to import date object :- for giving the date limit for the required stocks

iii) import pandas :- for the creation of dataframe

iv)import matplotlib for plotting the correlation heatmap

**Create a list of stocks**

**Fetch Historical Data**

Now fetch the price history of each stocks based on a specific time limit and appending the last close value into an empty pandas dataframe

**Compute and Plot Correlation Matrix**

Now compute the percentage change and Pearson correlation using the pandas dataframe functions **pct_change() , corr() ** and plot the correlation matrix using

matplotlib as shown below.

Note : **%pylab inline** is used as a display variable on ipython notebook.

**Sample IPython Notebook to generate Stock Correlation Matrix Map as shown below :**