In the meantime I've problems with this design. This for me (as most of the Arduino based projects) is an unfinished something. It is good for playing but unusable as a compass. I'd like to create something what I can give into my child's hand. What he/she can show his friends (dad made it). And I may manufacture in small batch.
And I don't want to use the LEDs form the NeoPixel ring.
The idea is the following:
Pick 120pcs 0603 LEDs (let say blue and red). Place them on a round PCB on the edge in two circles. From the blue all lit except one. From the red only one. The center of the PCB will contain the uC, maybe some matrix driver and the magnetometer chip. The back side of the PCB will get the batteries and the on-off switch. The whole thing goes into a round SOB enclosure.