Please see the steps your sister should have followed to make the watch ready, described in Apple's support document
What to do before you sell, give away, or trade in your Apple Watch, or buy one from someone else - Apple Support
In particular, the watch needs to be removed from her Apple ID so you can set it up correctly with your Apple ID on your iPhone. If you don't do this you will be blocked by Activation Lock. About Activation Lock on your Apple Watch - Apple Support
When your sister's Activation Lock has been cleared and the watch has been erased back to factory condition, you should be ready to begin pairing and setup to your iPhone and your Apple ID.
Set up your Apple Watch - Apple Support