C.V.
First off, he's not a terror or a demon child. Stop that.
Start teaching him about "gentle hands." In all cases you have the opportunity, show him how to pet, pat, and touch gently. When he pulls or hurts, remove his hands and hold his wrist away from harming his sister. Manipulate his hand to gently touch her. "See, soft. Love Sissy. Gentle hands." When he does it on his own, praise him. If he mischeviously defies you, remove him to a safe place, like his crib, for a time out away from everyone.
I am NOT one who recommends that we teach siblings to hit back. Teach them not to hit at all. Hitting is not behavior that you can take with you into adulthood. You don't teach children that it's okay to hit just because someone hit them. That isn't how we treat one another outside of the home, and it's not okay just because it's family.
ETA: I also wanted to mention, I'm not a fan or follower of the "one minute per year of age" rule. I think it's a silly and foolish rule. I've always put them into time out for the amount of time it takes to get them out of the meltdown or nasty attitude and to a point of contrition or calm.