Hello George,
Thanks for the feedback.
I see. Nevertheless, even the latest version of MP says that it should be COMPASS 1. This is a little confusing.
As you suggested, I have re-calibrated the compass after changing the orientation and my copter has become much more stable. Before I had issues with compass EKF going to the red zone when rotating the quad (changing YAW direction). Now it is gone! Thanks!
Though, I wonder why the arrows on my external compass are drawn that way. Should one trust these arrows in general or the orientation has to be determined experimentally?