Second, "found" or "picked up" flags, some, perhaps, souvenirs of an earlier association. The one wartime Medal of Honor awarded to a member of the US Signal Corps was to a man well inland in VA, but the flag of a CS ship, probably taken from a prisoner or "found" en route to Appomattox. (Years later the medal was rescinded. That evidently wasn't what was intended by "captured.")
Third, the work of the real experts is showing incredible promise of identifying maker, material, origin, and other features. It appeared to me that yours displays neat hand sewing. One of these days someone like Greg Biggs will probably be able to match it and tell you the maker and offer leads of origin.