When someone puts down or ridicules another person or group, that's derogation. Your sister might think her constant teasing is all in good fun, but if you view it as derogation, you should tell her to cut it out.
You'll often find this word used as a mass noun, to talk about entire categories or groups of people, like when business owners contribute to the derogation of homeless people by claiming they may be dangerous to their customers. You can also use it more generally to mean "belittlement." In legal jargon, derogation refers to a law whose effects are limited by its partial repeal.